You may by:
1) You can get a gift downpayment from family to cover the required 3.5%.
2) Seller can contribute up to 6% to your downpayment
3) Nehemiah downpayment, no-repayment - Seller signs contribution document. find out more at http://www.getdownpayment.com/hec.cfm
And yes, it is true you will have to show reserves. Meaning, you have to have that money in your account to prove you have the downpayment. But depending on the deal, you should get it back as credit/check at closing.
If you can afford to buy a home, YES I would advise to do so as rates are very low 5.25%.
Just make sure it is a loan you can handle. A good loan officer should help you with the guidelines and affordability ratios.