Most people still don't understand that if people bought their homes without a subprime loan, we never would've had a recession. Wall Street took all those subprime loans, bundled them up and sold them off as fancy financial investments. When people couldn't pay their loans as their variable interest rates doubled, it all went bust.
If you want to buy a house, there's a good chance you'll have to put 20 percent down, the WSJ reports this morning.
This is high by recent standards. But if you put 20 percent down, you're still borrowing 80 percent of the value of the house. You're still making a hugely leveraged investment. If you're like most people, you're still taking out by far the biggest loan of your life.
Requiring a higher down payment also means people are less likely to wind up owing more on the loan than the home is worth — and less likely to default on their mortgage. Planet Money