You can purchase either with FHA financing, VA financing (if you or your spouse is a Veteran), or USDA financing. VA financing actually just requires 2 years, but at 3 years obviously that is fine too. With any of those 3 you need to have at least 12 months of re-established credit, as well as no new late payments or delinquencies since (medical collections are usually the exception).
You may not have heard of USDA financing, but it is 100% financing in rural'ish areas, income must be no higher than certain levels, and only in certain rural areas can it be used. Modesto isn't eligible, but Ripon, Riverbank, Keyes, and Hughson all are. You can read a lot about it at http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
FHA : http://www.fhaoutreach.gov/FHAHandbook/prod/infomap.asp?addr
VA : http://www.benefits.va.gov/WARMS/docs/admin26/pamphlet/pam26 (Page 4-40)
USDA : http://www.rurdev.usda.gov/regs/regs/pdf/1980d.pdf (page 36)
If you need further info just let me know.
LBailey@prucalifornai.com, Lura Bailey Realtor Prudential Modesto.
I would suggest that you speak with a lender, since there are so many things that you need to factor in. They would have to review your information and get you an answer specific to your needs. If you would like I can refer you to a local lender that can assist you. Irma Trapolino 209-204-2304