The 3% Closing Costs could be calculated on selling price or mortgage amount. Ask you Realtor about it.
Assuming the you have an FHA mortgage, you mortgage amount will be,
3.5% = 7,175
and if you are rolling over the Up Front Mortgage insurance, that I believe is 1.75%, please correct me anyone if I am wrong, then $1,508
So, your ESTIMATE mortgage amount will be: $199,333.
But, PLEASE, contact your Home mortgage Consultant for a detail explanation of your mortgage expenses based on the specific property and exact closing date.
If the home does not appraise at $205,000, and instead appraises at $190,000, you will need to bring in $15,000 to start, then add 3.5% of $190,000, or $6,650, making your down payment $21650, which gives you a loan amount of $183,350, plus your Up Front Mortgage Insurance Premium of $4,125, giving you a total amount financed of approximately $187,475.