Brandy,
I haven't homeschooled, but I taught my daughter to read at a third-grade level by the time she started kindergarten. At 4, she just naturally started being curious about letters and sounds. Since I had been an aide in a kindergarten class with heavy academic emphasis, I knew a method for teaching her. I think it was the A Beka program that the school I worked for used. A Beka was heavy phonics at the time (about 20 years ago, yikes!), but I am not familiar with it now.
After she learned capital and lower case letters, I taught her their sounds, but only short vowel sounds to start. Then we started combining the sounds in simple words ie. dog, bat, mat, can, etc. I also taught her some basic "sight words", that don't follow any rule per say ie. eight, was, etc. Then I started looking at the book store for easy readers, but I don't remember any titles in particular. After she had some confidence with those basic words, we moved on to long vowel sounds ie. fire, cane, base, etc. Then she was off and running! I taught her other letter sounds, like soft c ("center") and soft g ("giraffe") only when she'd see it in the word. I tried not to confuse her too much, just gradually let her discover those "tricky" rules as needed.If she encountered a word she couldn't sound out, she'd ask me. Once was all it took. (She is an exceptionally bright girl, I can't take credit for my method, she just naturally absorbed it.)
I am a big proponent of phonetic-based curriculum. At one school district my daughter attended, they had recently changed from a phonetc-based system to a more whole-language type curriculum. In about three years, their standardized test scores tanked! The administration started harping on the teachers, saying they weren't doing their jobs. But the teachers fought back to get a phonetic-system again, and the scores have been going back up.