Average Down Payment in U.K. is 17% versus 2.9% in the U.S.

[Corey Dutton]

Why are homebuyers in the U.K. obliged to put down more on a home purchase than in the U.S.? Because in Europe, home ownership is still considered a privilege and not a right. The government-backed, FHA loans offered to home buyers in the U.S. with an average down payment of only 2.9%, these are nearly 100% financing loans. With such a small down payment, there is no commitment from home buyers. How easy is it to walk away from a down payment of 2.9% versus the average down payment of 17% in the U.K.?

But many people in the U.S. would argue that the new stringent qualification standards for FHA loans will keep these new loans from going "bad," like they did in 2008 and 2009. But what makes them so sure? With the new credit score requirements for FHA loans being pushed down to as low as a 580, how is this any better than the loans that were made prior to the crisis? Yes the stated income loans are a thing of the past, along with the negative amortization loans that were so popular leading up to the crisis. But FHA loans prior to 2008 were never stated income loans, nor negative amortization loans, so why is everyone claiming that the qualification standards are so high now?

The U.S. government is just continuing to push forward an agenda that home ownership is a right and not a privilege. Why do you think mortgage lenders in Europe require higher credit scores and larger down payments? In Europe there is no agenda being pushed to make people believe that home ownership is a right. Europeans know well that it is a privilege for those who can afford a down payment and for those who have good credit. Many reading this will argue that FHA loans give people a chance to rise above poverty. But with no real monetary commitment from the buyers, and with such low credit score requirements to qualify for FHA loans, what will happen when home prices collapse again in the future? I see just another wave of FHA loan foreclosures that we the taxpayers will bail out.