You need good credit, a bit of cash, and a decent income to buy a house.
First you shouldn't even consider buying a house if you are in debt (that means anything - car, student loans, credit cards, etc.). Once you are out of debt, you should strive to put 20% down on a 15 Year mortgage where the payment is no more than 25% of your take home pay each month. This will keep you from being one of the many foreclosures that we are reading about.
Before other agents hop in and tell me that I am wrong, and that Ribby can put down less and should get a 30 year because it would be cheaper - that is your opinion and I have given mine. The advice I give is from a nationally recognized financial advisor http://(www.daveramsey.com) and speaks more to the financial health of the buyer than simply just buying a house. I think we can all agree that the current market condition is a result of people who shouldn't have been buying houses - buying them. Even if we did benefit from the sales.
First Team Real Estate
Technically speaking, an FHA loan would require just 3.50% down. A VA loan (if you or your spouse is a qualifying Vet) or a US RDA loan (if the home is in rural area as defined by USDA) would require no down payment.
However, Cameron's advice below is rock solid. The challenge of a mortgage is that it will be your largest debt, take the longest to repay, and cost the most compared with other debts.
A Marine staff sergeant buddy used to tell me the 5 "Ps" of the Marine Corps: Prior Planning Prevents Poor Performance. This maxim is especially true for mortgages... if you plan well prior to buying, you will create for yourself the best chance to succeed as a homeowner / mortgagor.
The former banker side of me prefers to see buyers with little or no debt, cash in the bank after closing (at least 3 months living expenses), and employment stability. Owning a home costs much more than the mortgage payment, taxes, and insurance. Maintenance, furnishing, improvements, and basic care (eg mowing the lawn) take money AND time.
What to do today: Obtain a copy of your credit report. The Federal Trade Commission hosts the site for one free credit report per year at http://www.annualcreditreport.com. Look for any negative items on the credit report such as late payments, collections, charge-offs, etc. Some of these itmes might be old enough to be dropped (7 years for non-public derogatory accounts). Some might be innacurate. This web iste from the creators of the credit scoring model ( http://www.myfico.com ) will help you understand your credit report and provides advice on any corrections.