Ok. This doesn’t make much sense to me, considering what’s happening:
“4. It’s safe to buy a house with a very low down payment.
Because the Federal Housing Administration insures mortgages backed by down payments as low as 3.5 percent, you might think that buying a house with a low down payment is relatively safe. But in the case of a 3.5 percent down payment, a borrower winds up carrying $96.50 of mortgage debt for every $3.50 of home equity. And the less equity you have in your home, the greater the chance that a fall in prices will leave you owing more than the house is worth, a condition often described as being “upside down” or “underwater.” In this example, housing prices only need to fall by 4 percent to leave a buyer underwater.”
This is almost like zero down, which means no skin. Many that are upside-down now are not paying and/or walking and/or both. Apparently this is now an acceptable option.
