Historically, 30 year fixed rate mortgages are at record lows.  While this doesn't mean everyone needs to go out and by the biggest house they can, it is a great indication that you can in fact actually buy the home that you wanted, and PAY LESS!
You never want to be over extended on that perfect home.  Being able to afford the mortgage payment and not much else isn't recommended by me. 
Here is a great example of a home that costs 200,000.  I didn't include insurance, taxes, Home Owners Association Fees, Private Mortgage Insurance or any of those costs.  It is just an example to show what the difference in a mortgage payment will be based off an interest rate.

200,000     3.75% 30 Year Fixed     Payment is 926.23
200,000     4.75% 30 Year Fixed     Payment is 1043.29
200,000     5.75% 30 Year Fixed     Payment is 1167.15

That speaks volumes to me.  Will rates remain this low?  To me, that is anyones guess.  I have read the Federal Reserve wants to try to keep thier rates low, which in turn works to keep the mortgage rates low.  But so many unknowns occur. 
That rate difference between 3.75 and 5.75 is over 240 dollars!  Getting that mortgage right now at 3.75% could in effect make your payment plus your taxes and still not be as high as if the rate increases to 5.75%