My husband is finishing his medical residency and soon we will be making five times what we make now. However, we won't have a down payment for a home. We have excellent credit. Should we rent for a year and save? Or are we wasting our money on rent? Should we do some sort of piggyback loan and simply pay back the full amount of the downpayment loan in the first year?

You will need a minimum of 3.5% down which can be your own money or a gift.

When you rent, you are paying your landlords mortgage, when you purchase you are not and there are definate tax advantages. In addition to FHA financing with 3.5% down, as Alan mentioned, if you are your husband are Veterans, then you can purchase a home with zero down. Additionally, in certain parts of the country, loans are available under the USDA Rural Development program, also with no down, or you may want to contact a Realtor where you live and inquire about homes that are listed with seller assisted financing.

FHA & VA have no income ceilings.  The USDA program does.  If the annual income exceeds those limits [in most areas roughly $74,000 annually for families of 1-4 and $98,000 for families of 5-8], then the USDA program may not work.  The important thing is to not be pushed.  If you feel you have to rent or buy immediately, you may want to find out about sublets if you find a home you want to buy, but you find it takes a few months to find just the right property.

My suggestion would be to wait until he finishes his residency.  At that point, he will have no problem qualifying for a mortgage, employment wise, due to the fact that he had gone to school to be a doctor, and is currently in his residency.  All show employment and work experience in the same line of work once he does finish his requirement for residency.

Second, by renting now you will be able to take advantage of low rental payments, depending on the area of the country you live in, and will be able to save up the 3.5% down you will need for an FHA/VA loan.  Live below your means now so that when the raise does come, and he is able to practice outside of his residency, you will have the money saved up to purchase the home you really want.

Best of luck to you!