You should work on getting your credit scores up and saving some money for a down payment. The lending rules have changed dramatically and now buyers must be able to prove they can afford a home before a lender will give them money to buy one.
Focus on the issues at hand and in a year or two you could be in better shape. Right now is not the time.
Start the process talking with a loan officer in your area, if you can not make this time, save some money to put for your down payment in the future and work on your credit score. Working with a company for your credit score may keep you on track and focus for your future goals.
unless the TDHCA program was extended, it was supposed to have expired in December 2009. That program is simply for downpayment assistance, but any associated loan must still must be underwritten using FHA, VA, conventional guidelines. For all intents and purposes, your 529 score disqualifies you.
While some lenders will claim they can get you a loan with a 529 score, I've yet to see any of them jump at the chance. And believe me, any house that would give you a PITI payment of $700 per month, you wouldn't want to live in.
Given the brief comments you made, I woul suggest that it is premature for you to be thinking of buying a home. The goal of successful homership is with in your control, however. I would recomend locating a community organization in your area that could work with you on correcting any errors in your report and creating a plan of how to improve your score. You also need to find an advisor you can work with to establish a spending plan to start saving some money. There are probably several local organizations to work with you in the area. Talk to a couple and find a good fit. If you need help locating services, I suggest you contact the local United Way.
The steps to improve your credit and develop a savings plan will, not only help you qualify, but will instill the habits necessary for successful homeownership.
Good Luck to you