2-1/2" binding works fine. Sew it to the back, the pull around to the front. You will see your stitch line. Line the front binding up so it just overlaps the stitch line and then top stitch it down.
Things that will affect what is seen later:
- thread colour used in the final sew-down (kind of obvious, but match both top and bottom
- how far from the edge your top-stitching is
- how well you line up the top stitching with the ditch on the back
I like to aim for the top stitching to land just alongside the back binding so the bottom thread colour may differ from the front which is matching the binding. I know this is not the preferred situation, but it works for me. Sharon Shambler has a video demonstrating this and how to glue down the top binding before stitching to ensure perfect placement of the stitching you see on the back.