Reply to How common is it to put 5% down on a house?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]It is incredibly stupid to only put 5 pct down on a house.[/quote]

My net worth is approximately $400,000 higher than it would be if I had put 20% down on my previous two residences. Using FHA loans is literally the best financial decision I have ever made. [/quote]

It is complete bullshit that the federal government subsidizes home ownership. If you can't afford to put down 20 percent (or enough to satisfy a private lender) you have absolutely no business buying a home. The government subsidizing mortgages just makes them more expensive. But you don't care about that, of course, because YOU GOT YOURS![/quote]

While I'm pretty skeptical you're actually open to understanding why you're entirely wrong, I guess I will give it one short go: The FHA loan program is actually one of the best investments the Government makes. While its literally true that it can drive up home prices (though not necessarily mortgages, since it ultimately reduces the cost of credit), it does  so by providing countercyclical support during market downturns. That makes the market more stable, which is ultimately good for business. It is not an exaggeration to think it likely that the loan program played a major role in the housing crisis not becoming far worse than it was. Here is Moody Analytics' attempt to quantify the FHA's role in preventing a much deeper recession:

[img]http://i.imgur.com/xWwlgWs.png[/img][/quote]

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