I think it is crazy to take out a loan for more than 80%.
I agree. When we moved from Idaho to Utah, we sold a 5 bedroom home with a full basement, mature producing fruit trees & a large backyard with a large garden & berry bushes. The market was down, & we did not get top dollar, but after 10 months the house finally sold. Had we not owned that home, we would not have been able to hold on to it while DH was unemployed & looking for work.
We told the realtors that the "must haves" were 1) 4 bedrooms, 2) a garage 3) room for a garden & 4) a place for my canning jars on shelves. Apparently, those were unusual "must haves". It took us a year & a half, & we went thru 3 realtors before we bought the house we now own. The biggest problem seemed to be that the realtors did not understand that a carport is NOT a garage. My husband maintains our vehicles, & a garage has 4 walls & a door that goes up & down - so he can work on the cars out of the wind & the weather. The house we bought has 4 bedrooms, a garage, & I have planted a garden & fruit trees & berry bushes, & built shelves in the "cubby" for my fruit room.
When we took out the loan for $65,000 (which was the difference between the $165,000 they wanted & the $100,000 we had), the mortgage person at the bank looked me right in the eye & said that this loan was the smallest that his branch of Wells Fargo had EVER approved - - clearly expecting to embarrass us - -and the look on his face was priceless when we answered together, "Good!".
You should NEVER borrow as much as the bank approves you for in lending. Buy what you need, not what they want to sell to you.
It took us 7 years to pay off a 15 year mortgage, & own this home, but it is ours. Besides the monetary savings of not paying interest to the bank, the peace of mind knowing that it will not affect us AT ALL if the government does away with the mortgage interest deduction is priceless. We could not care less if the "price" of the house goes up or down - - it is not an investment, it is our home. When my knees gave out & I had to retire, we did not have to worry about how we would make the house payment.