I'm a buyer just about to close on my first home. It's been quite a rollercoaster ride, and I had to learn a lot quickly. First thing to know, this is a very poorly regulated industry. So you're going to have a hard time sorting out the bs if you don't do extensive amounts of research. With research, which is easy to do via the internet, you can get a pretty good handle on what you can afford, what a house should be worth to you, and what your rates should be. After you do your homework, don't believe the "professionals" that try to tell you otherwise. In this market, the buyer holds all the cards. If you're looking at foreclosures, sure there is less flexibility because you're dealing with a bank, but everything is much more straight forward too. The bank will issues the rules by which you will have to play. However, it is very true that you'll have a hard time getting an FHA program approval on a foreclosure, unless you find the perfect scenario. If you have decent credit and a down payment, you may wish to go conventional. Get pre-approved early. It should be free for pre-approval. Don't agree to pay any fees for it, and you don't have to use that lender for the mortgage either. You should shop at least 3 lenders before choosing one, and you should avoid mortgage brokers, they can't save you nearly what they claim especially after their fees. If you look outside of foreclosures, be VERY aggressive. Prices do not yet reflect the declines they should (if they did, there would be more houses selling). If you get pre-approved now, you'll have lots of time to look and be very picky. However, if you find something you like, it may mess up your timeline. Whatever you do, don't be in a hurry. Don't believe that the market can or will turn around any time too soon. Most recent projections figure that the downward trend will continue through 2009, possibly bottoming late in '09 and then remaining stagnant for 2-3 years following. You have to figure if that's a national figure, MI will only be worse. As for us, why did we buy now given what I just said, b/c it was right time for us, not b/c we're trying to time the market. We got a good deal, but still likely overpaid.