There will be closing costs, including escrows for taxes paid in advance. Then there are maintenance costs, along with any work that needs to be done before you can move in. If you haven't lived in a house before, you probably don't have a lawnmower or enough furniture, etc. Costs can add up fast!
Make sure you have enough cash on hand to buy it with a comfortable safety margin -- and still have a cash reserve for emergencies. You should put away some portion of the monthly payment in a separate account for unexpected maintenance issues, and consider a home warranty ($400 or so a year and you get virtually free repairs on the furnace and appliances).
It is difficult to get a loan below $40,000 or so these days; legal interest rate limits make them unprofitable, and underwriting standards have tightened quite a bit lately with the unfolding credit crisis. With poor credit, the interest rate will also be higher, and without a significant down payment, you'll be subject to PMI (mortgage insurance) -- and the rates for that are rising as well.
Is the property listed with a broker? Do you have an agent? An agent can help you through all this, including counseling you about the many first-time buyer programs available, and new financing options with FHA or HUD.
It sounds like there is a "human" seller (i.e., not a bank or other foreclosure). Foreclosures are tough to finance because of a catch-22 with utilities: you can't get a loan without an appraisal, and you can't get an appraisal with the utilities off -- but you can't turn the utilities on until you already own the property! This isn't a problem if the utilities are already on, or if there's a seller there who can turn them on for you.
What banks / loan companies have you tried? Have you been turned down already? Coldwell Banker Home Loans can be reached at 888-803-7264. I don't think they can help you under $40,000, but they might be able to refer you to a reputable lender. Good luck!