[quote=esmith]
All else equal, it is harder for a low-income homebuyer to save enough money for 20% of 3x his gross income. Basic cost of living is the same for everyone – non-discretionary expenses constitute greater fraction of income. Above certain level, every extra dollar of income (less taxes) can be saved. Thus it’s much easier to save 120k when you make 200k than to save 30k when you make 50k.
Mandatory 20% down payment for everyone would push disproportionate numbers of low-income families into rentals and disproportionate numbers of low-income houses into investors’ hands.
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I call B/S. I know low income people who live extremely frugal to save their 20% to buy their house. So it’s very doable if you put your mind to it. It won’t be as easy as if you make more money obviously, but it’s still doable. If they don’t have the will power and the discipline to save up that 20%, they shouldn’t be buying anyways. Easy money is what got us into this mess.
