1) you should have the money for the downpayment, even if you don't use it for that.
2) You should make sure you're comparing rent to PITIMR, not just PI or PITI.
3) Servicing amortizing loans is a losers game
I've been a landlord for ~15 years (and still am) and I currently rent my personal residence. My last personal residence I did an interest only 10% down. The decade or so prior to that I either rented or my company rented it for me when I was overseas for them.
I am probably going to move again in the near future and when I do I'm pretty sure I'll do an IO loan, minimal down, with the "down" coming from a securities backed loan of indefinite length and paid with dividends (that last part was a new idea from a fellow poster on this board - thank you!).
The only exception to this if I knew for certain I would never move house again. Which I find very hard to believe until I'm completely retired; after all, you've got a 30% chance of moving in any given year in your late 20s/early 30s, 20% chance in middle age, and even ~13% after you're past retirement age.
And, anyone who works for a global company and has ambitions of climbing the corporate ladder should expect to have to move at least a handful of times in their life (hopefully not as much as me though!)
I've done a healthy share of all types of mortgages in my life, including normal 20% down. When I've done 20% down, it's been because I want to avoid something: An escrow, more paperwork, a financial covenant, etc... The incremental interest has never been given much thought because it's relatively small in the grand scheme, net of returns on the retained capital.
If you are relocated by your company at any point in your life and they pay closing costs on both sides, then an interest only, 0% downpayment loan (if it were possible) + taxes + insurance + repairs/maintenance (what I call PITIMR, but in this case there is no P) = rent. It is darn near identical (and should be).
I believe what many people miss is they consider rent vs P+I only and see how much more they get "for the same money". This is where people fall into the trap. T, I, M, and R are also critical to the equation. The first step is to look at PITIMR vs Rent in your market to see which option is the better buy (spoiler -- it's probably better to rent on the coasts) and how to proceed. Do that analysis, and then unless it's a real estate bubble then if the answer is "Buy" then do an IO with minimal down.
Having equity in a house means it's not working for you toward retirement. When you're ready to retire - great, cash out your savings and pay off the house... otherwise it's just emotional security that will cost you dearly... if for no other reason than equity can't buy food but cash can.
When you compare renting vs IO vs 15 yr vs 30 yr mortgage, over holding periods of 1, 2, 5, 10, 15, 20, 25, 30, 40, and 50 years, assuming eventually you will sell it (which is the proper comparison, even if you decide someday you want to live there paid off).
When PITIMR = Rent, renting wins through 1-40 years because of lack of transaction costs (by far the biggest drag) and the money you make in the market on your downpayment instead of sitting as equity in the house (a much smaller part). At 50 years, the 15 year mortgage being paid off and investing the mortgage payment you didn't make for *35 YEARS* finally makes up the difference of years of rent savings. Of course, if you live in a home for 50 years: 1) god bless you and 2) you likely aren't heavily invested in the stock market anymore. So renting wins anyway.
If you must buy, due to limited rental selection or because you don't live on the coasts and renting is the worse deal, IO is better than 15yr note through 25 years, and better than 30yr note until 40 years.
15 year loan is always the worst idea until you hit 25 years, at which point the 30 year note is the worst.
You can do anything you want in life. The rub is that there are consequences.