It's definately still possible to qualify for a mortgage. Both responses are correct, but let me add to it.
FHA is most likely the program for you as they are generally the most flexible on credit rating and history. Ron is correct in that FHA did initiate risk-based pricing depending on your credit score and loan to value (LTV). It used to be that FHA would charge you an up front mortgage insurance premium of 1.5% and .5% monthly mortgage insurance, no matter what. With the new risk-based pricing, it can be higher or lower than this. However, the recent bill President Bush signed into law (H.R. 3321) put a moritorium on the FHA pricing hits, so we should see lenders change it back to the way it was, at least for now. I haven't seen any releases from lenders issuing this most likely because HUD hasn't provided any formal communication about it either.
The first step would be to have a loan officer pull your credit report so you know where you are and where you need to be.
Since you are in Minnesota, I would love the opportunity to refer you to a nationally recognized loan officer. Her name is Sue Woodard. She's actually somewhat of a celebrity in certain circles, but most importantly, she has the knowledge and tools to help you become qualified (if you aren't currently).
I hope you call her, Kim! Best of luck!