According to a recent study, requiring down payments of at least ten percent is less likely to prevent a mortgage from defaulting than other measures, such as requiring borrower income documentation and prohibiting hybrid adjustable-rate mortgages with “teaser payments”.
Researchers at the University of North Carolina’s Center for Responsible Lending used national level data to examine the effect of various requirements on borrowers’ access to mortgage credit and on the number of defaults they would be likely to prevent.
VHFA has found that that few first time home buyers are able to save down payments of ten percent or more. Sixty percent of our borrowers in 2011 purchased homes through a federal Rural Development program that allows qualified borrowers to borrow up to 100% of the home's purchase price.
Even at the height of the housing boom, VHFA has always required complete borrower income documentation and has never offered predatory loans like the hybrid adjustable-rate mortgages studied here.
Read more about the University of North Carolina study.