[Ummmm.. but by not putting that extra 15% down (to go from 5% to 20%) you kept that money. So you could invest it, presumably, in something other than house equity. If you wanted, you could sell those investments and put it into the house, and it'd be exactly like you did 20% down.
Like I said above, if you put a low amount down, it should be for financially strategic reasons. If you didn't have the money, that's one thing. But if you merely say "I should have put 20% down instead of 5% down," I disagree, because you're just trading one investment for another, and if you think putting it in the house is better.... put 100% down, or start aggressively paying off that mortgage. Since you are in the situation you are in, I'm assuming you didn't do that.
I did have enough to put down 20%, but would have completely wiped my emergency account, which would have been dumb.
Your logic to put only 5% down and invest the rest discounts the fact that your true carrying costs of the mortgage go up via PMI. It also discounts the comfort level of the individual. Some people are comfortable to be leveraged to the max, so financing 95% or more of their house is no big deal. Hell, some people leverage with no assets to back it up via credit card debt. There are situations unforseen in the future that become much more complicated when you are underwater on a home. Moving, upgrading, downsizing, job transfers, kids, significant others, neighbors... With the benefit of looking back, I'd rather have it paid for in full, or put as much down as possible and have more cash flow each month for other items.
Cash is fungible. If you have enough for 20% down, but choose to do 5, then later it drops like it did on you, you can reallocate to pay it down, and it's just like you put 20% down to begin with (besides having to pay PMI, but also earning a return on the money in the meantime).
But then you are still stuck paying PMI even if you do kick in the extra money. $100k home, put $5k down. House drops to a value of $80k. You kick in the other $15k, which 5 years later at 8% return is now ~$22k. Loan is now ~$65k (100 - 5 downpayment - 22 extra cash - 8 amortization) and house is $80k. You're still stuck paying PMI, as an appraisal won't show 20% equity. This PMI rate is still based on the original 95% LTV loan, so the premium doesn't decrease. The removal of PMI is complicated and varies from state to state. In my state, you must show 20% CURRENT equity, based on a current appraisal. And our little scenario has made some generous assumptions. 8% on your "extra" cash. What if the market dives, or you only get 5% ROR? House only dropped 20%. What about 25%? 30%? 50% as has been experienced in some areas?
Do you think we've hit the bottom of the market? How much faith do you put in the WSJ? CNBC? Your politicians?
I'm sorry you're in a situation where you're unhappy. But honestly, I would count yourself very lucky.
Don't get me wrong, I'm not complaining. And at no point in my post did I say I was unhappy. I am fortunate to be able to dig my way out of this and don't need your assistance to point that out. At the time I sought out and was approved for a loan much higher than the point at which I purchased, and could have been approved for higher than that. In short, I left my self a way out if things went south. Things did not turn out for the best and I'm implementing my way out. The downside is my long-term net worth.
Again, with the benefit of hindsight, I think anyone would say it was not a very intelligent decision to buy with so little down. Had I taken a different path, my personal balance sheet would be much better off. And I would think that the OP would benefit following a path different than mine.