China

Bear in mind i have never lived in China so someone who has may be more informed on this issue, but from what i have heard and read home loans aka mortgages are not as common in China as they are especially in the US. The mortgage regulations are much stricter and they usually require a more significant down payment, like anything from 30% to 60%. You often hear the statistic that 90% of Chinese people own their own homes, but an even more interesting one is that (officially) 80% of those are mortgage free. Due to the closer family ties in China parents often help out their children pay for their homes up front rather than take a out a bank loan.

Mortgages are more common for owners of multiple properties who buy second and third homes for various reasons (which is a fairly high percentage of home owners, maybe even as high as 20%, since owning real estate is seen as a good investment for retirement or even to leave to children).

As for how falling housing prices affect people with home loans, this is entering into more speculative territory on my part since i don't have data on this, but i suspect that most people who are buying their first home aren't looking to sell it again any time soon, if at all. They are buying because they plan on settling down and living there. This is of course different for people who buy additional property for the sake of investing and who might have been hoping to turn a profit by selling when the housing market was still rising. They will have to accept the loss or find other uses for their property.

The problem with home loans is that they are rife for abuse by speculators. A common scheme in a rising property market is to buy real estate on credit then use that rising value as collateral for another credit for another property and so on. This contributes to the growth of bubbles that eventually have to pop. Better that China popped its housing bubble now, in a deliberate and controlled way.