The proper advice to a consumer with low credit scores who wishes to buy a home: IF YOUR CREDIT IS BAD YOU SHOULD NOT BORROW MONEY TO BUY A HOME. GET YOUR FINANCIAL HOUSE IN ORDER BEFORE YOU ASK A LENDER FOR A MORTGAGE. There are no shortcuts such as credit repair or finding that one mortgage Lender who accepts loans for "500" credit scores!
This idea of "who does mortgages for scores below 620" and credit repair is the SAME IDEA that got us into this mess in the first place: lending to people who are not qualified to repay the loan!!!
I'm sorry if I sound obnoxious with my advice, but my polite approach doesn't seem to work when I answer these "bad credit" questions here on Trulia. Besides, I've already been down this road. When I blogged and participated in online forums and chats during the BOOM (Craigslist Housing forum, look me up: tcurranmortgage), I held the line on my opinion: buy a home you can afford with a 30 year fixed rate payment. I never waivered from that opinion and I won't waiver from this one today.
Dear frustrated consumers with bad credit: take your time to put your finances in order. Learn what a responsible HomeBuyer needs to qualify for and pay for a mortgage loan. Then work on those things---Income, Assets, and Credit---so you can make your dream come true the RIGHT WAY.