You might consider cleaning up your credit some before applying for a mortgage. Again, a good mortgage broker will be able to look at your credit report, and beyond the numbers to make suggestions on which areas are the weakest, from a loan standpoint. Depending on the cause of your bad credit, it may not take too long--6 months to a year--to substantially improve your credit score. That really would make good sense in this market. Prices are likely to remain flat or drop even further. In the meantime, you can work on your credit.
Other options include variations on owner financing. Anything from a lease-option to a land contract. In such cases, you receive the right to purchase the property (or receive the deed) at a future date, but make payments directly to the owner. The individual owner, too, may be concerned about your bad credit. But, depending on how much you have to put down, your income, and other factors, may well be more flexible than a bank.
Hope that helps.