“Although I’m sure there are other zip codes that are also considered distressed, I’m not being asked to put down at least 15% in the other neighborhoods I’m considering – just North Park.”

i should have been more clear, i didn’t mean the lender had anything against you, rather, they didn’t like the house. ie., they don’t want to loan you the money to buy that house in north park. eg., they think the house is a high risk for depreciation. that is, the house will potentially lose some 15% value (at least), thereby necessitating the big dp. for example, if you bought the house with their money and got foreclosed on, they would be eating a loss if they didn’t have your dp. id est, they don’t want to buy the house. that is to say, they don’t want to loan you the money to buy the house since they’ll be on the hook for it. exempli gratia, you wouldn’t loan your 16 year old kid money to buy an 86 chevy camaro because of reliability, insurance and plain good sense, but that doesn’t mean you won’t help him buy a car at all. you know?