There always will be subprime in some form or another, and not everyone with "less than stellar credit" is a deadbeat or even is someone without a down payment. There are 101 reasons someone might need a subprime loan. However, I'd generally recommend 5% - 10% down to almost anyone, unless they have a lot of money they'd just prefer NOT to spend and would rather keep it in reserve. Everyone's situation is different. Mortgage lending is not one-size fits all, and I think that was part of the problem - people with 560 credit scores generally aren't responsible enough to purchase a home...but it does, admittedly, depend on why their score is that low. It could be because of 12 small medical collections, or it could be because of never paying a single bill on time, ever. The first case, probably OK to buy, second case, not so much. Which goes to show credit scores alone aren't a satisfactory indicator of creditworthiness despite what Fair Isaac says.
Homes are usually a person's biggest debt. It is insanity to buy a house without the means to do it. It's a set-up for failure. And, the bigger the investment of money, heart and hope, the bigger the failure when the bank repossesses. Who needs that?