Buying your first home can sometimes be scary and intimidating, especially if you don't know where to start. My recommendation is two-fold: First, take time to sit down one-on-one with a local Realtor for a buyer counseling session - even if you're not ready to purchase right away. There are a lot of agents like me that will work at your pace and walk you through each step before it happens. This will eliminate surprises and increase your confidence! Second, as many others have suggested, talk with a lender recommended by your agent for a pre-qualificiation letter to determine what your options are. This can seem like a scary step, but it's actually very simple and it doesn't commit you to buying. Once you have a chance to look at the numbers, I think you'll be surprised at how much home you can afford based on the current rental rate you're paying! A good lender will also help you develop a plan of action to bring up your credit.
For a better understanding on the steps to buying, check out my blog, Hampton Roads Real-E-Statement, at http://www.alyssagodwin.com.
You can flip through at your own pace and, hopefully, find answers to many of your questions!