I'd like to correct myself...

I wrote "it would hurt", but I intended on typing "wouldn't"

have you looked into any banks yet?

If this home is sold for the $255000, 5% down would only be $12,750- not much higher that the 12,500 you mentioned. It is doable but you have to look at your credit and make sure it's in good shape. you can geta free credit report at http://www.annualcreditreport.com you have to pay extra (I think) to actually see your fico score, but you can look at all the activity and accounts that are there and whether you are in good standing with the companies.

It would hurt to go to a bank and ask them to see if a 5% down loan is a good option for you. If you get a pre-approval (not a pre-qualification) it will make home buying alot easier knowing exactly what you can afford and what payments will be like. Many of the local banks will even let you apply online.

some area banks:
Greenfield Savings Bank
Greenfield Co-operative Bank,
Franklin First Federal Credit Union
Freedom Credit union
Bank of Western Mass
Bank of America
TD Banknorth

If you're not ready to apply for a loan yet many banks show what mortgages they offer on their websites!

Best of luck