With an FHA loan that only requires a 3.5% down payment, I'm able to buy a home right now and comfortably afford the monthly payments. However, I know that means I'll pay PMI and more interest over the life of the loan. A 20% down payment would allow me to avoid PMI, however it would take me around 4 years to save that amount. During those 4 years, it's very possible that home prices and interest rates will like increase.
What I'm wondering is whether it makes sense to buy a home right now with 3.5% down while home prices and interest rates appear to be at their lows (speculation) or should I wait the 4 years and buy a home with 20% down regardless of where prices and rates end up?