Thyname - 5% can make a difference in your mortgage payments (alhtough 10-20% is much better), as does the type of loan - sit down with your sig other and figure out what the real cost of owning versus renting would be. Make sure you factor your tax savings out of what your are paying for your mortgage.
For example, my wife and I were paying $1300/month for our rental 2 bed + den apt (Chicago). 2.5 years ago, we bought a 2 bed condo for 283k with 5% down. Between our two loans and condo fees we pay approx $1800/month principle and interest. Last year, after our first full tax year, we received $3700 income tax return. So our net per month payment is about $1500.
While it's still more then what we paid in rent, it is significanlty less than what we have (hopefully) earned in equity: Our niegborhood has been averaging 10% appreciation/year and a unit a floor below us recently sold for $330,000. We are looking to sell in April or May and should be able to use the equity and capital gains from our sale to cover the 20% down on an actual house in the burbs.
I think the thing that really convinced us to buy is we sat down with our accountant, and using rate quotes we received from lenders (0 down, 5 down, fixed, ARM) we looked at hypothetical scenarios and picked one that would allow us to purchase and still save a bit on the side. Renting was still a possible choice down to the end.
Good luck!
