Unfortunately, too many people are facing those choices today. Please be aware that yours is not a unique situation. The problem, as you've already discerned, is how to get your family into a good home, in a good neighborhood that you can afford; and how to start working on getting your credit re-established.
A lease with an option to purchase might be the best option available to you at this point. With a good lease/option program combined with some professional credit counseling, there's a possibility you'll be in a position to buy a home again within a reasonably short period of time.
You didn't indicate what part of town you're interested in. Is school district an important issue for you?
We work with several investors who have lease/option homes available. There may be something that'll suit you. Also, it'd be good to know more about your situation - are you still in your old home? If so, is it headed to foreclosure and when? When do you need to be in a new home? A lot of my business is working with people to try to minimize the emotional and credit impact of losing a long-time family home; and helping them get into a new home.
No cost, obligation or commissions for help & ideas around this. If you want to send an email or call me, my contact information is here:
Nextage Achieve Realty
9560 Montgomery Rd.
Cincinnati, OH 45242
Please feel free to contact me for more details provided you're interested in doing something like that.
I know of a program that can help you get your credit back on track. You are not far off!
I feel for your situation, and I think we may be able to help get you back to being able to buy if that is what you are looking to do.
Contact me and I will put you in touch with the mortgage officer for works closely with a credit agency that can help you for a much lower cost than many of the self proclaimed online credit repair places.
Have a good evening!
Faith Home Loans
Please see my blog with tips and advice on lease purchase and the rent to own process