It seems I am a little late in responding to your inquiry. I have no dog in the proverbial fight. I can tell you that Amy Wolff from First Guaranty Mortgage Corporation has been excellent to work with. Most importantly, she has navigated several clients through a variety of credit related issues. She can be reached at (240) 575-3416.
You credit scores would not indicate a responsible use of credit. However you can get that back on track in as little as 6 months. Make your payments on time and pay down any balances that are close to your credit limit. Once you have a proven history of good payments you should be able to apply to any bank.
If both incomes and credit are to be used, I don't believe you'll find a mortgage available right now. The lowest score that I see considered are down to around 580. If your wife is the primary wage earner, you may be able to proceed with just her credit and income.
The other consideration is to work on your credit. Paying down open balances to 1/3 of their limit, disputing derogatory reports and of course paying on time can improve your score fairly quickly.
I agree with others who have said the best answer will come when you meet with a lender and have them pull your scores. Sometimes the credit scores provided to consumers are not the same as the ones a lender will pull. Your situation may better or worse than you think. Meet with a lender and plan a strategy to buy.
What's your wife income?
What are the total monthly payments on all credit-reported debts? (credit cards, car payments, student loans, etc)
Is she in a profession where she takes unreimbursed expenses and claims them on her/joint tax return?
Is the money to put down seasoned in a bank account or is it coming from elsewhere?
Help us help you with answers to the above.
Your 520 is far too low to be on a loan at this time, if you're looking at buying soon, your wife will have to go solo (of course you'd need a credit review by a loan officer who has in-depth knowledge of credit reporting/repair).
The best thing to do is talk to a mortgage profeasional and see what opportunity there is to raise the credit. Sometimes its a simple fix and sometimes it can take six months. Id like to look at your current situation and see if I could help you out.