> Why would you want to buy a house at 3% down.

Why wouldn't you want to buy a house at 3% down if you have limited funds? I personally purchased with ~5% down on FHA with the $7.5k grant for first time homebuyers. Nabbing a good rate when interest rates are low, it's more beneficial to throw the money in a 401k. The rate of return is higher on a simple index than the interest savings over the course of the note when putting more down even when accounting for PMI.