you got some great input here. The only thing I would add is that don't get too gung-ho about foreclosures. A regular owner-occupied home with equity will give you a better chance of negotiating prices down than an REO. (It's a reverse psychology). REO's start rock bottom but go on multiple bids, you're looking at a minimum winning bid of 40k above list price in a good neighborhood and almost move-in condition homes.
An owner-occupied home may look a bit higher but that's more negotiable and will give you leniency on repairs and closing time should need 3 days to 1 week (you will have less penalties).
And I might add -- do not go with " for sale by owner" (FSBO). Having practiced for over 20 yrs, I have indulged my clients in stopping at some homes that we drive by along our appointments marked as FSBO -- these always comes out higher priced as these sellers are not adviced on market conditions or what makes the house next door justifiably more (or less) priced than their home.
It's hard to argue with pride of ownership with sellers who have no professional representation. Thw worse is both you and the seller go without any realtor representation-- You loose out as buyer on a lot of your basic rights in home buying (a friend of mine did that thinking she's saving a lot of money and ended up paying over $800k, and still has remorse after 5 yrs that she didn't even ask for some things-- I can name 2 easy ones.
Also, there are neighborhoods close to Irvine that may get you your 400k 3 bedroom home (Townhome or condo-- not a single family detached).
Call me if you need assistance.
Agnes - 714-308-8117
Shore Capital Corp & Vista Pacific Realty