So you go to the bank and say you make $1500 a month. Bank will allow your monthly payment to be 41% of your income: $615 total, including taxes, insurance and home owners dues if applicable. This payment allows you to buy an $80,000 house at best, if taxes aren't too high. Suppose you can't find anything nice in that price range. What do you do then? You look at houses requiring a rehab loan, it will say so in the listing. You find a fixer priced $40,000 to $60,000, and you make an offer specifying financing: FHA 203K Then in the 10 day inspection period you call a contractor and ask him to come out with you and bid on the repairs. The contractor will give you a rough estimate of how much the repairs would cost. You need a minimum of $5000 of repairs, and the maximum allowed is $35,000. Be careful not to exceed the maximum loan amount you are approved for when you add the purchase price and the cost of repairs. The bank will finance the total package, you'll pay the same low 3.5% down of the total amount. As you can see, it is quite easy and affordable.
