Originally Posted by MediaArtist
If you can't afford 20% down, and reserve funds, then you should be looking at a smaller, or less expensive house. Your advice is absolutely horrible.
I don't understand why this advice is absolutely horrible. How many people really have 20% in cash to put down on a house? For an example, let's take a 200k house which would require $40,000 down (a large amount of money for most people). Now, would it be in a buyer's best interest to deplete their savings account and put that full 20% down, or say only put 10% down leaving the buyer with some cash on hand to deal with emergencies or other financial issues. Home ownership seems to incur other expenses unexpectedly, so wouldn't it be smart to keep some cash available? For instance, the home inspection may say the furnace is in ok condition, but what if it ends up failing in the middle of winter? Replacing a furnace is not a cheap expenditure.
I'm guessing you'll probably say that one should still save up 20% in addition to some reserve cash. The thing is, there are some housing markets in which it is a good time to buy. While waiting longer to save that larger down payment, home prices and interest rates could rise forcing you to wait even longer and save more.