Buying House with no money down?

One of the things I want to do is buy a house. But where I live the median house price is Seattle is $405,000. That is way out of my league. I've been thinking (not too seriously) about the no money down offers I see everywhere. FreeMoneyFinance has a good answer to whether that type of loan makes since. NO!!! That's what I was leaning towards as well. His post is based on a Kiplinger Report that lists the following reasons for not buying a house with no money down:

• Saving for a down payment will lower their costs and give them both security and flexibility.

• Equity in your home also gives you a source of cash in an emergency.

• The bigger the down payment, the lower your monthly payments, which may mean one of you can afford to stop working, if you wish.

• Buying a house with no money down comes at a price. With less than 20% equity in a home, you'll generally have to buy private mortgage insurance, which costs up to 1% of the loan amount.

Makes sense to me.  The three things I really want to do is payoff our debt, have a decent sized emergency fund and have enough money to responsibly buy a house. Though our debt is a long way from being paid off, we do have $1000 set aside for an emergency. It's not much, but is better than nothing. That'll pay rent and buy us food for a month or so. It doesn't look like we'll be able to pay a house anytime soon.