I second what MarkB said. Assuming the bank and additional funds aren't a show stopper, what is the house worth to you? If it is just a house on a postage stamp, I would probably walk away, since there will be plenty more just like it. But if the property has more features (like barns, garages, fields, etc) it is probably worth the extra cost.
One other question, will this be a starter home or investment property? Basically, do you plan on selling the home in a couple of years? If this is the case, walk away. With the market the way it is right now you will probably not recover the extra cost. However if you are like me and plan to never move again, the extra upfront cost will be trivial over the life of the morgage.
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