The first step should be to find a trusted and experienced mortgage lender especially with fha loans, stay away from internet lenders. You can also try to contact your state housing assistance department to see what down payment assistance programs, gifts, grants or such are available in your area. FHA is the way to go for you. Once you have a preqpproval for a mortgage then you will know what price range you should be looking in, short sales are tough, they take alot of patience and time, check to see how far along the short sale process is before you jump into that market. if you jump in at the starting process it could be 4-6 months. goo dluck with your purchase.