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How Much House Can I Afford With 5% Down?

Putting 5% down is one of the most common moves for first-time buyers — it gets you into a home years earlier without depleting all your savings. Here's exactly what you can afford with 5% down and what it costs.

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Quick answer

With 5% down, most buyers can afford a home priced 3–4× their gross annual income. On a $75K salary, that's roughly $250K–$300K — though you'll pay PMI until you reach 20% equity.

Affordability by salary with 5% down

Assuming a 6.5% mortgage rate, 0.8% PMI, average property tax (1.1%), and the 28% front-end DTI rule:

  • $50K salary → home price about $175,000 (down payment: $8,750)
  • $60K salary → home price about $210,000 (down payment: $10,500)
  • $75K salary → home price about $265,000 (down payment: $13,250)
  • $100K salary → home price about $350,000 (down payment: $17,500)
  • $125K salary → home price about $440,000 (down payment: $22,000)
  • $150K salary → home price about $525,000 (down payment: $26,250)

What 5% down really costs

On a $300,000 home with 5% down ($15,000) at a 6.5% rate over 30 years:

  • Loan amount: $285,000
  • Principal + interest: $1,801/month
  • PMI (until 20% equity): about $190/month
  • Property tax + insurance: about $400/month
  • Total monthly payment: about $2,390
PMI ends automatically

Once your loan balance hits 78% of the original purchase price, PMI is canceled by federal law. Most buyers reach that in 7–10 years through scheduled payments alone.

5% down vs 20% down — true comparison

On a $300,000 home at 6.5%:

  • 5% down: $1,991/month payment, $15K cash up front
  • 20% down: $1,517/month payment, $60K cash up front

The 20% buyer saves $474/month but waits 8+ years longer to save the extra $45K. During those 8 years, the 5% buyer is building equity and possibly riding home appreciation. The math is closer than people assume.

Who should put 5% down?

  • First-time buyers in markets where prices are rising faster than savings
  • Buyers with stable income but limited savings
  • Anyone who wants to keep a real emergency fund intact (3–6 months of expenses)
  • Buyers planning to stay in the home 5+ years

Pitfalls to avoid with 5% down

  • Don't drain your emergency fund — keep at least 3 months of expenses after closing
  • Don't skip the inspection to save $400 — repairs can cost 100× that
  • Don't max your DTI — leave room for property tax hikes and surprise expenses
  • Don't forget closing costs (2–5% of price) on top of the down payment

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Frequently Asked Questions

Is 5% down enough to buy a house?

Yes. Conventional loans allow 5% down with PMI, and FHA loans go as low as 3.5%. You can buy a home without 20% down.

How much PMI will I pay on 5% down?

Typically 0.5%–1.5% of the loan annually. On a $300K loan, expect $125–$375/month until you reach 20% equity.

Can I remove PMI on a 5% down loan?

Yes — automatically at 78% loan-to-value, or you can request removal at 80% LTV. Faster if your home appreciates quickly.

Is FHA or conventional better with 5% down?

Conventional is usually better if your credit is 680+. FHA can be cheaper for lower credit (580–679) but has a permanent mortgage insurance premium.

How much income do I need for a $300K house with 5% down?

Roughly $75,000–$85,000 a year, assuming average debts and a 6.5% rate. Higher in expensive states with steep property taxes.