I've been looking at houses in Iowa because they are SO cheap.  Some
are even in the $30 - 40,000's.  With a mortgage like that, I'm
guestimating that my monthly payments would be between $300 - $600.

My stats:
Single mom, two kids.
No assets.
Fair credit.
I live in California, but am moving to Iowa in the summer.
After I move I expect to have an income (including child support) of
about $2000/month.
Possibility of a very low down payment.

I know that this seems a very unreasonable situation to look at buying
homes.  But, if my mortgage is only $450 a month, it seems so easy.

****Is there a good (or any) chance that I would be able to buy a home
in Iowa under these conditions?****

A $40,000 home at 7% interest (If you have average credit then I can't
imagine you paying more than 7% and you'll probably pay less), your
payment will be $266 per month + mortgage insurance if required.  So
no more than $300 per month on a 30 year loan.  You might even
consider a 20 year loan for just an extra $44 per month.

It looks like Iowa property tax is around 3% though it varies every
year so your tax would be about $1200 per year or $100 per month.

It's a common rule that your house payment (including taxes and
mortgage) shouldn't exceed 28% of your total pay.  If you're paying
$300 for mortgage and $100 for taxes every month that's a total of
$400 which is only 20% of your $2000 income which is definately
doable.  I suggest you make out a budget of all your expenses though
so you'll see where your money is going (and should be going).

If you plan on living in the house you buy for atleast 5 years then I
think it's a great idea to buy a cheap house.  And if you feel
adventurous and energetic maybe you can even paint the place up nice,
put in carpeting and maybe a new roof and greatly increase its value
before you sell it.

I'll also recommend with your income level under $25,000 that you
qualify for a 10% tax credit on any money you put into an IRA up to
$2,000 per year.  That means, if you put $2,000 in an IRA then you'll
get a $200 credit AND the $2,000 deduction.  Essentially the
government will pay you to invest for your retirement.  Here's a site
that can help you do that if you're interested:
https://flagship3.vanguard.com/VGApp/hnw/content/AccountServ/Retirement/ATSStartSavingRetVGIIRAContent.jsp

I must say I'm quite jealous, I'm near DC where the average house
price seems to be around $400,000.  Best of luck to you with the move
to Iowa and your many financial decisions to come!

I agree with a lot of what the previous commentor noted.  that being
said, you might consider renting for the first 6-12 months to see if
you like the area, job, people, etc..  That way you have the
opportunity to meet local folks and real estate people.
However, if you do decide to buy a home, I would not recommend putting
money into n IRA or any locked in savings vehicle at this time - you
will be needing the money to repair, remodel, kid's needs, etc., and
should not go into credit card or second loan debt to take care of
these standard expenses.
Also, although low dwon payment loans offer a way to get into the
market, they do have their concerns (such as higher monthly payments,
having to pruchase mortgage insurance for your lender, and other money
management issues)
Best of luck to you as you and your children in your move.

Also, you should consider looking at your financial situation, as to
what would happen if your child support payments were late or stopped
(I am only mentioning this since you included these support payments
in your gross financial picture to determine your finanability). I am
not suggesting that your ex will deliberately do this - it's just that
sometimes things happen (loss of job, personal crisis, etc.) and you
sould consider keeping your potential investments/expenses within a
budget that you have more control over (unless you also have an
emergency nest egg of savings to cover unexpected expenses).

Not to disagree that an emergency fund is essential and that money
will be needed for repairs and such but...
Keep in mind that 28% (the normal agreed upon amount that should not
be exceeded for housing) is 8% more than the 20% that $400 would be...
or $160 per month more.  That leaves up to $160 for repairs and such.
Also, the IRA comes with a 10% credit (which happens to be the same
amount as the 10% early withdrawal penalty) so should you desperately
need this money it will come at no net cost to you.  In fact it is a
net gain even if you withdraw the money early since you not only get
the 10% credit, you also get the $2000 deduction on your taxes.

Buying a home is one of the smartest things you can do to not only
provide a stable home base for you and your child but to start
aquiring wealth.  if you have decent credit and income of $2000 month
I could get you financed any day on a $40,000 home.  The best thing
for you is that the house you get for $40,000 today assuming you live
in it for 3 years may be worth $75,000 by then.   After three years
you may have paid down only $10,000 on your mortgage.  That means if
you decided to sell it, you would owe $30,000 and you would get
$75,000, that is a $45,000 nest egg you just accumulated toward a
bigger down payment and a bigger next home, and you got to write off
your mortgage payments on your income taxes.  Contrast that to renting
a nice apartment for three years.  At the end of three years you move
with zero$ and no tax breaks.  You can find a wealth of FREE reports
that explain these concepts at www.flhomeloan.com  Best of luck to you
and your family.

Ah Spam, thank you Cashman.  

Let's not forget though that home values for 30 years before 2000 went
up about 3% per year (not the 25% per year that you're claiming). 
That 25% per year growth we've seen over the last 4 years is not at
all sustainable and the market will adjust for that.  Prices will
either level out or the market will crash.  In either case people who
owe alot on their mortgage (compared to what the house is worth) will
not be in a good place financially if they have to move.