Congratulations on your new home. My advice is to split the jobs into pieces.

1) remove wallpaper and paint
2) get professional painter's estimate for painting the cabinets. You may choose to do it yourself.
3) replace the backsplash and countertops
4) when you are ready to redo the whole kitchen, replace the floor with a good quality sheet vinyl or ceramic tile.

A comment on the flooring. It looks very much like Armstrong's Stencil Craft Colonial Classic in the beige color which was discontinued in 1995. It was a very high quality flooring that is tough as nails and may not be showing any wear yet. It can be easily cleaned with a sponge mop, then coated once a year with "Pledge with Future Shine" http://www.amazon.com/SC-Johnson-11182-Pledge-FutureShine/dp/B000ARPH4C/

I can help! I had a very dated kitchen in my first home as well and we completely transformed it for less than $3000 total. You can do it in steps, like we did. I've attached some pictures. What I don't have is what it looked liked before we put down new vinyl flooring (it was only slightly less hideous than yours). I suggest starting with the floors and walls. You can find discounted vinyl or tiles from overstock stores or Habitat for Humanity "Restores". Also, don't forget the clearance sections of Lowes and Home Depot. Either remove the wallpaper and paint or paint over it. We replaced our floors first then painted the walls, moldings and cabinets and replaced the hardware which really helped. Replacing with brushed nickel and with matching the holes gave it a more modern look, less expensive and easier to replace. Then, we replaced the counters tops and sink. The counters look granite but are really laminate. If you have no corner counters, you can easily find these on clearance at home improvement stores. We never added a backsplash but there are so many inexpensive options for this all over the Internet. We just painted ours. We also had a family friend remodeling her kitchen and she gave us her island. It had a cooktop in it so we added a countertop and my husband put in a shelf. Here are a few before, during, and after photos. Hope this helps.

I forgot to mention, my husband and I did everything but the floor ourselves. I did pay someone to put down the floor but he was in Iraq when it was done. I'm sure we could have done that ourselves as we'll. Enlist the help of friends and family - it will make it quicker and easier.

Please do post if you end up buying it. We would love to see your progress! Perhaps the 'dated' kitchen will get you better tools for negotiation then you canl enjoy making it your own! Is that a wood back-splash? If so, I love it. As far as a re-do, it is all relevant to your budget, of course. The wallpaper is where I would start. Strip it and prime it properly (any Benjamin Moore Retailer can walk you through it). You can reface your cupboards, just paint them, or do a budget overhaul from IKEA...they will even plan it all for you. Keep in mind that painting out the cupboards is a cost-effective alternative to replacement but can be a daunting diy task, if you don't have alot of help. The floor is another place for updates...there are loads of cost effective floor options all the way to ripping it our and staining and coating the concrete underneath...depends upon your style. Have fun!

You could do really cute mylar floor checkered floors or a vinyl by Duchateau-their vinyl floors are stunning-look totally real and are reasonable and a green product: http://duchateaufloors.com/wp-content/uploads/2012/08/VinylDeluxe-DuChateau_2012.pdf

We're in a similar situation and plan to make changes slowly. I agree with apple_pie_order that you could leave the flooring until you've saved up to get something you really want. It may look pretty decent once you've made a few other changes. I would remove the wallpaper and pick a nice colour that you like that goes with your counter and backsplash. I actually like your counter and backsplash. They look to be in great shape. I think painting your top cabinets white and your bottom cabinets a darker colour or white would look great. Change the hardware on your cabinets and you've got a lovely kitchen. Look into how to paint the cabinets, you might need to sand a little or use a special primer with some bite. Good luck!

can you cook without the lights on? :) i think the two worst things are the floor and the wallpaper..if you could change those, the cabinets might look better? and then the backsplash could be covered with contact paper perhaps? or can it be painted? i know how it is to live with an old kitchen!

These comments are so great. Thank you all so much. It makes the idea of buying the house less scary. At least I know there is hope! If we get the house I will definitely be using this site for suggestions and I go and posting updates!

If you paint the cabinets, be sure to prime them with first.

The kitchen, if you are planning to do a remodel, then to keep it cheap just do paint for now. Paint the cabinets, and paint the wallpaper (I have painted over wallpaper with no issues if it is stable and not peeling). Take baby steps and don't invest a lot of money. Buy nice knobs and pulls on Ebay for cheap (or buy what you want if you can reuse them later). If you plan to replace the flooring later, consider replacing it now with something you love if the floor plan will remain the same.

Those changes may be enough to calm you until you do a complete (expensive) remodel. Consider refinishing the countertops with one of those kits on the market (I have read good things about them), or just leave what you have as is. It may work once you have painted. Good luck.

You can go even less expensive than the prior posts. Ikea makes butcher block counters that are as inexpensive as lower-quality laminate. If you don't have any funky dimensions you can get that an install it yourselves. We have not only a really wide lazy susan corner, but our countertops are such that they can't be removed. (Just trust me on this, it's too hard to explain.) So we refinished ours with Giani Granite Countertop paint. We got it on sale - $50.) It's a tad delicate, but it's been since last August and it's still good as new. Take down the wallpaper and paint, obviously. Tile is really easy! We did our backsplash recently and got the tile on sale at Menard's for $1 per square foot. Or, you can paint the backsplash and not tile. We actually added a raised 4" backsplash to our counters when we painted them, by simply attaching a 1x4 piece of lumber which we primed and painted with the countertop paint. Here's some not-so-great photos of the before and after, from original, to added backsplash to painted...but before we touched up the green paint. :)

I would do the things that apple pie order suggests. In addition, I'd remove the valance over the window and replace the hardware. Check around for hardware prices. Lowes and Home Depot are ok - but you can often find quality hardware on ebay and other discount sites.

Congratulations on your potential new home!

I would remove wallpaper, pick your paint color for walls that you love, or something neutral. I would keep the backsplash for now for sure. I think it's kind of cool and will look fine once the cabs are painted. here is a lot of prep work for the cabinets, but you CAN do it. I would fill in all the detail indentions on the cab doors and sand them so the face is flush and smooth. You don't need that detail. Do the floors last!!!!!!!!!! If they are going to be changed anyway, it won't matter if you spill paint etc on them. You don't want to mess up a pretty new floor. Someone above mentioned ebay for hardware. I totally agree. You can get some nice ones for half the price of home depot or lowe's. Countertop and sink can happen later as well, but you may want to shop around and see what you like, so that you can coordinate all your colors/materials for the room. Yes, get rid of scallop of above sink. A nice roman shade (for color or pattern) in the window or even a woven natural looking shade depending on other elements.
You can shop for flooring later. If you want ceramic tile, there ARE deals out there and it's not hard to do it yourself. If you want wood, you can find a deal on that as well. Just be patient. Look on craigslist in your area for materials as well and appliances. You may be surprised at what you can find IF you are patient.
I redid my whole kitchen for under $3000, but did all the work and was patient. It took a year and a half, but was worth the wait. here are the befores and afters...

Just a note, when I suggested doing floors and walls first, it was if you had to go in stages. The cabinets and counters will be easier to live with, as is, than vice versa. That said, if you're doing it all at once, of course it makes better since to do the floors last.

This is the 3rd time I've tried to submit a comment--hope it works this time!
After 27 years in a kitchen that was so awful I wouldn't even take photos (too humiliating), it is amazing how you can function quite well in a nasty kitchen! This kitchen has a lot of things going for it. Keeping in mind your comments about money, and thinking that you maybe recently married (going by your photo), I think that lots of paint may be your answer for two reasons--time and money.
--Paint the floor. A recent blog post described how the homeowner painted the laundry room floor (vinyl or linoleum) quite successfully. The floor should be one of the latter major changes--you don't want a ruined floor due to some of the remodeling.
--Paint the walls. If you are short on time, maybe you could paint over wallpaper. (Does that make it harder to remove wallpaper later?) The wall pattern combined with the floor pattern would make me grit my teeth every time I walked in that room.
--I love wood cabinets and cringe when people talk of painting wood, but those look odd. Given what you want now, though, I would leave them alone at first and change the floor and walls. Live with those changes for a while and then maybe paint the doors only. You would not have to empty the cupboards, it's easily doable in a weekend, and you won't waste time if you later get rid of the cabinets altogether.
--Leave counter, sink, backsplash, and range for now. They look very functional and go well with a variety of floors, etc.
--Wait with major money expenditures. This will give you time to get the funds you want to make major changes, and will give you time to live in the kitchen for a while and figure out what you really want to change and what is optional, as well as what materials you want to use. It would be a pity to put a lot of $ into improvements that you later wish had been put into other changes.

This is all such great feedback. We do have some money to play with so I can do some changes. We are putting in our bid today(eek!) because after some more research, the changes we want don't seem out of our reach. The first order of business will be ripping up all the carpet and refinishing the hardwood underneath. After that we can tackle the kitchen. Fortunately, time is on our side though. If things work out as we hope, we will probably have 6wks-2 months that we have the house while still having an apartment (during warm months) so we are hoping to get a lot done before moving in. There is also a very large deck which makes projects a little easier to spread out and work on. I think we may try to get the wallpaper down to paint, paint the faces of the cabinets (why bother with the inside if we plan to rip them out eventually, and possibly consider laminate flooring. Fingers crossed that everything goes the way we hope!

Here is a great place to get a quote for butcher block countertops: http://chopbloccuttingboards.com/butcher-block-countertops/

Congrats and good luck with the new home. We couldn't afford new counter tops in our old kitchen. We simply tiled over the existing cruddy laminate using standard on-sale tiles and rounded half-edge ones at the edges for a nice finish. It looked great, didn't cost much, was a weekend DIY project and lasted for years.

I guess gone are the days of getting a first mortgage and piggybacking a second 8-).

I think first you should get rid of the wall paper & paint in a nice neutral colour, something to lighten it up & make it less busy. Then stand back and take a look. From the photo the wooden splash back doesn't look too bad if you look at it on its own, it could be an interesting feature, so I would leave that for now. The cupboards are not so nice looking so you need to decide to either paint or replace. If your on a tight get budget you probably will be doing this step by step so I'm just thinking I wouldn't do the floor until you have decided what you are doing with the units, wouldn't want to replace the floor then turn around in 12 months and have to replace it again to fit around new units. :-)
Good luck

I'm sure you could cover the wall paper with paint..but don't. Makes it so much harder to remove later. So remove it now. Paint the cabinets and change the hardware. Boy, what a mess,huh? Peel and stick vinyl floors for now? Good luck...almost anything you do will improve.

We couldn't afford tile for a backsplash behind our counters. I did however, find a wallpaper border that looked like tile. I put the wallpaper at the bottom of the wall where the counter meets the wall. If you use a good wallpaper it is easy to keep clean. We just painted above the border with the same wall color. Looks good.

Remove and/or paint over wallpaper, run down to home depot and pick up a new laminate countertop.
that should tide you over until you can gut it and redo from scratch.

Soooo....what did you do with your kitchen so far?