You are very close. I would suggest you meet with a qualified lender that specializes in first-time home buyers. They will be able to get you where you need to be to move forward. I have seen credit scores raised in a very short period of time with the right council.
A credit couselor can advise more based on your individual circumstance, but I have seen this raise scores from 5-30 points in 30-45 days...and its FREE.