The lack of downpayments contributed to the housing bubble. FHA guarantees encourage reckless lending since taxpayers will be stuck with the losses. These are bad ideas that Bush is proposing. The excesses of the mortgage market should be born by the lenders who bought the risky paper, and by the borrowers who bet on ever rising prices.
I know I put down over half of the price of my condo on the downpayment in 1991 to make my payments small. I basically have only 10 or 11 years left on my mortage and am considering paying it all off with my savings to help with medical costs. (The money gets spent one way or another, doesn’t it?)
The small downpayment strategy doesn’t make sense to me.