What you're describing above would all but rule you out for conventional loan financing these days. I might also ask if you are current on your tax returns? Sue (below) correctly mentions that you must get your credit history in order so that you can someday get mortgage financing. It is also important that your tax filing history is clean. If you're having a problem with this second aspect, you should call Bob Crane at Ameritax (415-475-4070) before you file for 2010. He can address any IRS issues if they exist and there is tremendous peace of mind once this happens and it sets the stage for better things ahead.
Last, I strongly recommend that EVERYONE read 'The Richest Man in Babylon'. it is the best book to understand how to develop 'financial intelligence' on how to build towards responsible financial planning.