What loan program can I use to get a primary residence loan with 5% down and no mortgage insurance?
The only program in the reviewed guidelines permitting a primary residence purchase with 5% down and no mortgage insurance is a VA loan. For non-VA borrowers, no guideline in the reviewed materials supports 95% LTV on a primary residence without an MI requirement.
Guideline Requirements — Program-by-Program Breakdown
1. VA Loan (Nations Direct Mortgage) — Cleanest Path
- No PMI or monthly MI at any LTV on VA loans.
- A purchase with as little as zero down is allowed at 100% LTV on a primary residence, with no mortgage insurance
- With 5% down, the VA funding fee is reduced: the Nations Direct Mortgage VA Matrix confirms a funding fee of 1.50% (first-time use) at the 5% down tier
- The funding fee is a one-time upfront cost (financeable into the loan amount) — it is not MI and carries no ongoing monthly obligation.
- Eligibility restriction: VA-eligible veterans, active-duty service members, and surviving spouses only.
2. Conventional Conforming at 95% LTV — MI Universally Required
MI is required across all reviewed conforming programs above 80% LTV. No overlay or exception waives this:
- Nations Direct Mortgage (Freddie Mac Home One): 30% MI coverage required at 90.01–95% LTV for 25/30-year terms
- Nations Direct Mortgage (Freddie Mac Home Possible): 25% MI coverage required at 90.01–95% LTV
- JMAC Lending (Freddie Mac Home One): MI required for LTV > 80%
- JMAC Lending (Fannie Mae Conforming): MI required for LTV > 80%
- AmWest (Freddie Mac Home Possible): 25% MI coverage required at 90.01–97% LTV
- Forward Lending (CalHFA Conventional): MI required for all loans with LTV of 80.01% or higher
3. Non-QM Portfolio Programs — No MI, But Max LTV Is 80%
New Wave Lending A-QM Expanded Portfolio (AQM EP)
- Mortgage Insurance: Not required.
- A minimum of 5% borrower contribution is required for primary and second home, 10% for investment.
- Critical limitation: Primary residence LTV caps at 80% across standard, bank statement, and 1099 income types. The 5% minimum contribution applies within that 80% LTV ceiling — it does not unlock 95% LTV. This program does not satisfy the 5% down / no MI combination.
New Wave Lending A-QM Self-Employed Above (AQM SEA)
- Mortgage Insurance: Not required.
- Same finding: primary residence LTV capped at 80%; the no-MI feature only applies within that cap.
Exceptions or Alternative Paths for Non-VA Borrowers
If the borrower lacks VA eligibility and cannot put 20% down, the practical alternatives are:
- 20% down + Non-QM portfolio (AQM EP or AQM SEA): MI is structurally not required at 80% LTV
- Lender-Paid MI (LPMI): MI cost is embedded into a higher note rate rather than a separate monthly line item — available on conforming programs, though it remains a form of MI coverage
- Piggyback structure (80/10/10 or similar): First lien held at 80% LTV to avoid MI; a second lien covers the remaining gap — availability varies by lender
Program Comparison Matrix
| Program | 5% Down Allowed | No MI | Primary Residence at 95% LTV |
|---|---|---|---|
| VA Loan (Nations Direct) | Yes (0% minimum) | Yes — no MI at any LTV | Yes |
| New Wave AQM EP / AQM SEA | Yes — but max LTV is 80% | Yes — within 80% LTV cap only | No |
| Freddie Mac / Fannie Mae Conforming | Yes — 3–5% down | No — MI required above 80% LTV | Yes, with MI |
