square foot homes are $600k. There are no cheaper homes to save up for. A couple with a $200k household income can't wait and save enough for a down payment on a $1M 1,500 square foot house. Home values have been increasing (for a long long time) faster than that couple's ability to save for the down payment. That's the situation the business model is targeting (plus probably all of the dumb people you are talking about that are just making questionable financial decisions).

By the way, the $20k fee is a function of the option value. If the home is cheaper, the option fee is going to be less. So you can't really view it as "I could pay a $20k option fee or I could save for an FHA loan." That situation or anything comparable doesn't exist.