Need advice: Home buying for low income w/ bad credit?

Does anyone have any advice for buying a home if you have low income and bad credit? I live with my fiance and am disabled, but not on disability yet. We both have miserable credit, but his grandmother has immaculate credit and will co-sign. We just want a nice house in the suburbs of Huntsville, AL, where we... show more Does anyone have any advice for buying a home if you have low income and bad credit? I live with my fiance and am disabled, but not on disability yet. We both have miserable credit, but his grandmother has immaculate credit and will co-sign. We just want a nice house in the suburbs of Huntsville, AL, where we live... we are tired of throwing rent money away for nothing!

He currently makes under $13k a year, which I know is not much at all.

Does anyone have any advice for us? We aren't in any hurry, of course, we are looking to buy within the next two years, tho... preferably the sooner the better, but we know better than to hope for that.

Thanks!
Update: I really can't deal with the HUD here in Huntsville, AL, due to the fact that they only allow their housing program out the people who have lived in public housing for one year and must have children and the waiting list for any kind of housing loan help thru them is over 2 years long now. That's why... show more I really can't deal with the HUD here in Huntsville, AL, due to the fact that they only allow their housing program out the people who have lived in public housing for one year and must have children and the waiting list for any kind of housing loan help thru them is over 2 years long now. That's why I'm looking for extra options.

$13k may not seem like alot to those who live up north, but this is Alabama, and it doesn't cost too much to live where we do... we live comfortably in a nice apt in a nice neighborhood... we're just ready to move on to something better... we're 27 and 29, respectively, and ready to start a family. :) (we have no children right now)
Update 2: Oh yeah, and when I said suburb, I actually meant just some nice neighborhood house within the city... I forget that the term suburb may have a different meaning in different places.

Houses generally go for $40k - $150k in the neighborhoods we've been looking at.
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