Aren’t these the rules that used to be pretty standard for most banks naturally? I don’t have any problem with it. I would just say that for every 10% additional down payment beyond 20%, there should be some flexibility in the debt to income ratios. If someone has serious “skin” in the game they are a much better risk and the loan to asset ratio is much safer.
Up until the 1990s you had to put down 10% and 10% was insured through private mortgage insurance. And the 26/36 rule was there. FHA was 29/41. VA was 41% only with no front ratio.
From 2007 to 2010 my wife and must have sold 80 houses or so. Only one buyer put down more than 3%. Not one of those buyers have gone into foreclosure yet.
What caused this mess was phony values and no doc “B” paper interest only and and adjustable loans. People bought what they could afford at the time but when the rate adjusted the houses had dropped to what they should have been valued at to begin with. Now they can’t refinance because their house doesn’t appraise. Were they stupid to have paid the over valued prices? Sure. But knocking another huge percentage of buyers from the market is not the solution.
I can see a mortgage moratorium in the future. Plus, a major bank failure is looming, too. Times are really going to get tough.