I'd get as much debt as possible when rates come down, although I don't know about the whole 3.5% thing in the near future. Leveraging debt doesn't have to be risky if you are using leverage to buy non volatile (relatively), stable assets in good and proven markets. I'd put down 3% on your house. 97% leverage. Home equity is dead - It doesn't earn you anything. Take that other 17% that you would've put down and go invest in an asset that will generate a return and make that spread. In my opinion, the goal with a primary residence is just to fix your cost of living so you aren't prone to rent raises. At 3% down, I can get a place and set my monthly cost of living for 30 years no matter what inflation does, what rates do, what the value of the home does. I'll take that money I didn't spend on a 20% down payment and go put it to work. I personally can't justify putting down 20% on a primary.
There is a negative connotation with leverage and risk and blowing up a fund/portfolio/life but that doesn't have to be the case. Debt, in the right hands, is one of the most valuable things we can get. If every real estate investor got 15 year mortgages and didn't want debt, the world would look a lot different than it does today.
To me, it's all about controlling an asset with relatively little of your own money. Why make a $2,000 / month payment, for example, on a 15 year loan when you can make a $1,000 payment on a 30 year loan and go put that other $1,000 to work every month. The math is powerful there. Over a lifetime, that extra cash invested in even an index like SPY amounts to millions of dollars.
