Adjusting and deforming 3D garments to body shapes, body motion, and cloth material is an important problem in virtual and augmented reality. Applications are numerous, ranging from virtual change rooms to the entertainment and gaming industry. This problem is challenging as garment dynamics influence geometric details such as wrinkling patterns, which depend on physical input including the wearer's body shape and motion, as well as cloth material features. Existing work studies learning-based modeling techniques to generate garment deformations from example data, and physics-inspired simulators to generate realistic garment dynamics. We propose here a learning-based approach trained on data generated with a physics-based simulator. Compared to prior work, our 3D generative model learns garment deformations for loose cloth geometry, especially for large deformations and dynamic wrinkles driven by body motion and cloth material. Furthermore, the model can be efficiently fitted to observations captured using vision sensors. We propose to leverage the capability of diffusion models to learn fine-scale detail: we model the 3D garment in a 2D parameter space, and learn a latent diffusion model using this representation independent from the mesh resolution. This allows to condition global and local geometric information with body and material information. We quantitatively and qualitatively evaluate our method on both simulated data and data captured with a multi-view acquisition platform. Compared to strong baselines, our method is more accurate in terms of Chamfer distance.