Before I go any further, yes I know there is an actual book "Home Buying for Dummies" available.  It's in 4th edition right now which was published in May '09.  I'm not positive that the market now is the same as then, but I'm almost afraid to trust any source that wasn't written last week.  I will likely read it at some point.

Let's face it, I'm not getting any younger.  Later this month I turn 28 and the itch to build equity in home ownership is getting almost too difficult to ignore.  I've been researching a high level overview regarding home buying, and frankly it's extremely disappointing.  With everyone saying "Now is the time to buy, home prices are so low!", I'm trying to determine HOW people actually do it.

My first challenge of course is that silly Chapter 7 nonsense that closed in January '08.  With the credit market the way it is and from what I've read, it's pretty much going to be impossible to finance a home without about a 700 credit score.  I don't think I've ever had a credit score of 700.  Based on what I've seen from Credit Karma (which uses TransUnion to estimate) and other reports, my score ranges from 590 to 660.  This is also due to the fact that both Experian and Equifax have refused to remove a couple loans from my report that were discharged in my bankruptcy, even after multiple dispute attempts.  TransUnion removed them as soon as the discharge was granted.  My credit score has been steadily increasing and should be approaching 700 shortly, but with the black mark of a bankruptcy, I'm not sure it'll make a difference.

The second item of concern is the standard %20 down payment.  Everywhere I've read I've seen that anything less than %20 down is pretty much a death wish.  Now, without going into specifics, I'd say my amount of disposable income per month is moderate, enough breathing room to handle unexpected things, but not enough to live extravagantly.  Some arbitrary study on some random website showed that the median home price in "the south" is around $163,000.  So even purchasing a lower end home, say $100,000 to $120,000, that's putting the down payment at $20,000 to $24,000.  How?!  No account in my name ever has had even remotely close to that amount of money.  So because of that I don't deserve to purchase a house?

Again, without being specific, I personally have known people that have worked in restaurants and entry level tech support and have been able to purchase pretty decent houses.  Knowing the salary that is paid and the timing of their purchase, I can guarantee that they were not able to put down %20.  So what's the missing link?  Did they have some reservoir of cash they just didn't tell anyone about?  Is there some magical program out there that gives affordable mortgages with little to no down payment?  How are people with little to no or bad credit getting mortgages?  It makes me think that there's still hope after all the soul-crushing things I've read, but what's the point in making the investment if you are going to pay an insane amount of interest or an insane monthly payment.  People have always said, "Why would you rent when you can own for close to the same amount?".  I guess that only applies if you have an 800 credit score and %30 down in cash.

Does anyone know the real story about first time home buying?  Is the big scary internet doing it's job of fear mongering or are my concerns and analysis right on point?