If you are financing, the fact that rates are at historical lows means that you payment may never be lower on this home. If you qualify for one of the 100% financing programs available such as VA or guaranteed USDA you could be looking at a mortgage payment of only about $800/mo plus taxes and insurances. You probably could not rent a similar property for less. If you are putting money down that payment would be even lower.
You need a place to live and as long as you are flexible with the time frame you are willing to stay there, not only will this be an reasonable housing payment, it could turn out to be a good investment also.
There is always reason to be cautious about the future, but there is also a reason why you feel it is a great deal now.