What would you do in my scenario? (Advice)

[survivorx2012]

My long term goal put me at purchasing a property by early Spring 2014.  Due to the rates jumping within the last few weeks, I am thinking of buying early before the rates go to 5-7%. 

The issue is that I don't have nearly enough in liquid funds and could probably only muster up $15K at the moment for the downpayment and closing costs. 

If I wait until early 2014, I will have $40K.

Should I wait and gamble on the rates or buy now but put less money down and potentionally a smaller home? 

If I purchase now, it will be a FHA or Homepath loan for around $250k or less. 

If I purchase in 2014, it would be a conventional loan for around $300K.

Borrowing from family is not an option and I will not take a loan from my 401K. 

My FICO is 809 (today) and hers is around the same.  No issues on the credit report for both of us.  Our combined income is a little over $100K and DTI is 12%.  Our goal is to stay in this home for more than 5 years as a single family detached goes for $500K minimum in our area. 

[Sunshine85]

I would wait until Spring. IMO, this is one of the largest purchases you'll ever make, and you should not push yourself to buy before you're ready. 

Even though rates increased drastically within the last month, I do not foresee rates in the coming months increasing as quickly as they have this month. The market is crazy, and IMO, many of the houses I see on the market in my area are overpriced. Everyone is getting caught up in this frenzy-- sellers are getting greedy and buyers are taking a "now or never" approach. This is the same behavior we saw a few years ago- and we all know how that ended. 

Winter/Spring also tends to be the slowest buying time and you may be more likely to find a good deal. You would also have a considerable downpayment and you would be able to use conventional financing, which will be a huge plus when you're submitting offers.

[tooleman694]

I would not wait, rates are going up and home prices are rising like crazy. The money you save could just get eaten up by the rise in home prices.

I would go conventional right now with a home in the 300k range.