Don't do it.
As first time buyers, you're not prepared for the stress, hassle, uncertainty, and delays involved with a short sale. (Are you really looking forward to 3-6 months of negotiation which stands a reasonable chance of not even succeeding?)
Do yourself a favor. Work with a good Realtor. Find yourself a home you can afford that's being sold conventionally. Look into FHA loans. And if you can close by the end of November, you can qualify for the 10% tax credit for new home buyers. That time frame is doable with a conventional purchase. It's not with a short sale.