Under water - higher equity is better?

[Jeremy H.]

Doing some risk analysis.

Let’s say I buy a property now and market value drops soon by 20% is it better to have less downpayment such as 20%.  Or if it is better to have / had 40% (either higher down or big lump sum to principal)?

[Theresa Harris]

Put as little money in as you can to buy it, but if you are buying in a location where you expect prices to drop 20%...why would you buy there?  If it is the general market that you expect to go down that much (it won't happen), then why not save and buy when prices go down?

The only time I know of recently in the US when house prices dropped was about 15 years ago when banks had been lending money to people that should never have been given loans.