Susan. Can I ask you a difficult question?
Why, if you've demonstrated a borrowing behavior that falls in the bottom 20% of all borrowers in the US do you feel prepared for home ownership? Why do you feel a lender should take you on as a partner in a real estate purchase when you're not willing to share in the risk (with a down payment)?
I don't mean to be cruel. Home ownership is an American aspiration that frankly benefits most people shortly after they make it. But candidly, we're coming off a sticky economic situation - that was partially borne by lenders who got borrowers into homes they frankly weren't capable of carrying. They didn't have any money to fall back on when the value of their home dipped in a overly competitive market or they didn't have an equity cushion (because they were over leveraged in their property) when a situation came that required some other cash. Too many borrowers - "over tapped" and trapped - have walked away from their properties. They now get to wait out 7 to 10 years of foreclosure ratings on their credit reports and consequently higher borrowing rates but that's another thread. Do you want that in your future?
We've done no service to you as the client and no service to our industry by suggesting ways to put people into situations they've demonstrated they can't manage. You're not managing the debt you have - why do you want more?
You know, there are creative ways to get financing to purchase a home in any market. But "can you" and "should you" aren't really about credit score so much as they are about being ready to take on the risks and responsibilities of home ownership. The great American dream to own a home comes with the privileges AND the responsibility. You haven't saved to participate in the risk associated with the purchase, why do you think a lender should shoulder the risk of taking you on as a partner in the purchase of a piece of real estate?
Home prices are in the low spot on the market cycle and Interest rates are still low so for the ordinary buyer, it is a good time to buy. But with your score, you can NOT expect to achieve any of the advertised rates you see anywhere. You can expect to pay a much higher interest rate than a borrower that presents a lower risk (higher score) or contributes a much larger equity position (down payment) to the total value of the asset (home).
Frankly I would be stunned if you can find a lender that will lend to you at all in this market - but if you still insist on putting yourself in the position of being a homeowner, I would at least start by getting a lender to say "yes" to you and then making sure you understand the other costs to close. There are closing costs by the way and even if you are able to find a no money down approved purchase, you're going to have to come up with approx 2% of the purchase price to get to the closing table and pay the other fees. (which actually in your case may end up being much higher).
If you can find a lender that will take you on, at least make sure you understand the "yield spread" up front so you aren't taken greater advantage of.
Candidly, I suggest you reel in your spending on non-essentials, reduce your debt (which will help you qualify for "more house" when you are ready) pay all your bills on time to improve your score, check your credit rating monthly (there are affordable services for doing this) and clear up any undeserved poor marks that may be keeping it lower.
I'm sure this is not what you wanted to hear but in good conscience, I can't advise you on how to work around the system for loan approval. You'll be in a far better position to go into home ownership if you can truly afford it when the time comes.
Good luck to you and be patient - all things come in time and when you're ready it will be a much better place in your life to be.