@Brian Murray a lender would be best equipped to handle this question, but for most secondary loans (Fannie/Freddie) that I've seen you'll need to go FHA to take advantage of lower downpayments with an owner occupant situation. 5% down conventional is typically single family residences.

Conventional requires around 680ish fico and a lower DTI.

I was wondering if the process takes a bit more time if your down payment is lower.

I refinanced my FHA first mortgage in February to get a lower rate, but that did not allow cash out. 

Income tax benefits: You can take a dividend income which is taxed at a much lower income tax rate. 2. 

I'd make a stink of the repairs and ask for a lower purchase price.

The unique situation of wanting to stay in the property will deter most buyers.Possibly negotiate a lower rent for the 1st year for a reduced sales price. 

In a seller financed deal is 5% or lower down payment common?

Tried to explain to one that some -not all-agents don't show listing with lower buyers commission and he wanted to argue with me about it was our fiduciary duty to show all. 

If they specifically need to cash-out to buy another home than seller financing is often DOA.As mentioned, if the have a balance on their underlying mortage- If they want to pay it off it might require a big downpayment- It is possible to leave it in place with a Wrap but that is an advanced strategy and while fairly low risk, the due on sales clause is a concern.On interest rate, my experience is that a seller finance buyer usually has to pay a few points above the going interest rate for conventional/FHA lending so probably closer to 7% these days although it never hurts to ask for lower...All of this is theoretical so the advice to chat with seller to get more information is the right next step.Jeff