Okay, there are a few people who pay cash for their home. Last year I worked for several and this year is beginning with at least one. For most buyers a real estate loan is an integral part of the home buying process. A brief look back For many years the 20% down payment loan was the standard that was used by lenders. (And yes, that was a LONG time ago.) Then came a government sponsored program, FHA, which “insured” that 20% portion of the loan and encouraged those same lenders to make loans with only a 3% down payment. These FHA insured loans were generally for lower priced, entry level homes. Following WWII, the Veterans Administration wanted to make it possible for returning vets to purchase homes and provided guarantees to lenders for veterans who made no down payment. The process worked pretty well with some enhancements. FHA insured loans worked so well that the private sector began to offer “private mortgage insurance” to lenders which again insured that portion of the 20% equity not covered by a buyer’s down payment.