Some folks just can’t afford 20%, 10% or even 5% down no matter how long they save but they can afford to make a house payment.
Banks should base a loan on ability to repay not by the size of the down payment. A large down payment DOES NOT guarantee the loan will be repaid and that’s been proven over and over.
Correct, but it DOES increase the homeowner's incentive to make those payments. As such, it discourages people from taking out loans they cannot afford, otherwise thinking that the government will bail them out.