Should I rent for another year to save...?

Yes, I absolutely think so. If I were you I'd look first in Yorkville in Manhattan, Clinton Hill in Brooklyn, although other areas should work too. You have to find the right building, a board that will see your military service as a major plus (which it is). BTW renting is not really a waste of money, unless you also think groceries are a waste of money. Studies show that for many middle class people renting is a better investment than owning. But we're talking NYC here, and it's unique.

You definitely should save an additional 5% of your income for closing costs, though with a VA loan I think you shouldn't go 80/20. That would be my suggestion.

my first thought was the Clinton Hill Coops. The building was built for veteran's families and the board should be quite receptive. If your budget doesn't afford the south campus, http://streeteasy.com/building/clinton-hill-coops-south-campus-325-clinton-avenue-new_york/1d you can look in the north campus, which is less expensive.

Here's a good article.

http://www.nytimes.com/2013/06/11/nyregion/va-loans-are-rare-in-new-york.html?_r=0

Thank you for the advice. In regards to VA loans..I heard they are not the best option in NYC. I don't mind a traditional loan because I prefer to put money down and I've heard that Co-ops don't necessarily like the VA loan. Any advice on whether or not I should pursue VA vs NonVa?

since you're not sure you should buy this year, it seems like a good opportunity to take a few months and explore a VA Loan.

I had heard from a friend that the Clinton Hill Coops had accepted a VA Loan a few years ago but I can't verify it.
The key is that the building has to be on the approved VA list. I would give the VA a call and do some research.

Another option is to look for a new condo development where the developer has to reach a percentage sold before the building will qualify for occupancy. They can work with you on the process to get the loan and provide documentation to the VA to get the building approved. You'll be able to qualify for a higher price point with a VA Loan, but you might need to look at neighborhoods with lots of upcoming condo developments; Ridgewood, East Harlem, parts of Queens.

Doesn't a lot depend on how much one will be able to save in that time? If it's under $6k would that sway much?

I don't believe there are VA loans for co-ops. Like FHA loans if you're buying into any development even if it's a condominium it has to be VA approve.