First and foremost - i would work on building your credit.
It may take some time - but with a decent plan, and some discipline, you'd be amazed what even a year can do to your fico score.
There are some programs out there for people with bad credit. Honestly - the terms are not that good (okay, they suck) . Given the extra money you are going to pay for the privelage of getting a loan - financially it very well may make more sense to spend some time building your credit, and saving any extra money you have towords a downpayment. It may seem like you're throwing money down the toilet right now - but if you do get a loan, it will most likely consist of a lot more money down the toilet compared to the equity that you could be building instead of paying higher interest, fees, mortgage insurance, who knows what else your lender will try to hit you with.