You may be able to get an FHA mortgage. They are willing to look at explanations for poor credit and not just the scores. Contact a lender who does alot of work with FHA and see what they can do for you. A score in the 500s does not neccessarily mean you can't get a loan.
In general, yes. Having said that - talk to a lender first. I've had lots of buyers who thought their credit was bad until a lender pulled and reviewed a credit report.
Ted Stewart, CRS, e-PRO
Yerman Witman Gaines & Conklin Realty