You would be a perfect candidate for a lease option/ lease purchase/rent to own program.
These programs typically work with people who have dinged credit but would like to get into a house for long term rather than continue renting. A lease option essentially works like this: the tenant buyer (renter who wants to purchase the property) signs a lease with an option to buy the property within two years. During the lease period the tenant buyer works towards improving their score so that they can qualify for a loan at the end of the two year period.
There are a lot more details to a lease option/lease purchase/rent to own program and they vary by company. If you choose to go this route, make sure you do adequate research to protect yourself, your money and your option to buy the house. Also make sure that the company you choose to use is reputable.
Attached my company site with more information on lease options. We are specialists in this method of buying in Colorado Springs.
Let me give you one more option. Contact small local banks and ask to see foreclosures which fit your budget. They may be willing to finance you in house on one of their foreclosures. They typically require 10-20% down, terms of 6.5%-7.5% fixed on a 30 year amortization. As you clean up your credit you can go to the private market and refinance at hopefully better terms. Some small banks will overlook credit issues such as medical, divorce or even foreclosure. Good Luck... more