Try to finance a home with bad credit or pay cash for a fixer-upper?

With your credit score that low, there are no lenders that will give you a new mortgage. I would seriously think about why you are selling your home you are currently living in? It sounds like the $40k brick ranch home is going to need a fair amount of money put into it. Where will you get the money? You won't even qualify for a small home equity loan even if you paid cash for the new property. First I would consider if you really need to sell. And then, I would figure out where the cash is going to come from to do the repairs you will need.