Take the larger down payment and put it into something bigger, which lowers your %equity in the property but still keeps the $equity and the cash flow is now going into the larger property.

Believing there is less risk because you are investing a small amount of money (in this case using only a 5% down payment) is the second biggest mistake you are making behind purchasing this asset property in the first place. 

     * House is a 2699 sq/ft Single Family Residence| 3 beds, 3 bathroom | Built in 1956 | NO HOA     * There is a chance I could pay only interests so I can start saving some cash for the incoming maintenance and annual payment equivalent to the 12 monthly payments (~$5,029.77 per year during the balloon period)The advantages I can identify in this deal for me are:* Lower interest compared with traditional loans* Lower down payment compared with the ones compared for traditional loans* House is technically ready to be rented (waiting for the inspection) * Forecast - 3 yr growth (appreciation) is expected to be 8.1 % (Bigger Pockets)The disadvantages I can identify: * I am still vulnerable to foreclosure if sellers don't make mortgage payments to the bank.* Refinancing issues at the end of the Balloon Payment?

I have this theory that basically the stock market can grow faster than the fundamentals more so than housing, reason being when people put money into their 401k or whatever they are just throwing money in, not looking at p/e or whatever, the stock market is in part just an index of Americans excess savings plus it’s a unstated policy of the government that stocks go up, where as housing people are obviously very very aware of how much thier monthly payments is/ how much rent is, plus it seems that is actually a push to lower housing prices at least relative to inflation.

If a single partner pays the mortgage personally, the payment must be treated as a contribution to the partnership, as specified in the partnership agreement.

@Nate Jenks - @Andrew Postell did a great job clarifying the big challenge you'd run into pulling cash out with such a low down payment. 

Locking in a lower interest term loan will also force you to get the principal down as opposed to just making minimum card payments every month that allow the balance to keep growing.

While down payments and principal payments aren't deductible, inspection fees and other acquisition costs can be added to the property’s basis for depreciation.

I'm stressing because I wasn't anticipating this and am not excited about the prospect of paying 2k more than I was expecting when my mortgage payments kick in next month.I'll be searching the forum for answers as well, but since I am kinda desperate at the moment, I thought I would go straight to the source for advice.

(Down Payment Assitance Program).