Not sure how "so-so" your credit is, but you'd be suprised at what does not constitute derogatory credit. So some "slow pays" and larger balances might not exclude you from a conforming loan. Especially with some explanations and perhaps a larger down payment. So shop around a bit and find out, dont assume you're sunk.
Primary criteria for any loan is - how much are you investing. Lenders approach things very differently at 50% LTV (50% "down") than 95% LTV (5% "down"). If you have at least 20% of the purchase price, it'll make it easier, as you can avoid insurance on the loan. The more you can put down, the more accepting underwriting is of credit dings. There are many variables, each loan if different, as criteria are interdependent. Get a good banker, they can walk you through.
If you've already been to A (read 1) bank, try a few more; large, medium and small, as they each have different criteria. If you're still getting run around, try a private mortgage broker. A "good" broker can be your best shot. Like any profession a "poor" one can ruin you, or at least your deal.
Not sure the regs in Texas, but they've become much more regulated nationwide. Dont let it fool you - shop and compare. Get three people telling you the same thing, more than likely thats the situation. Get different stories, ask questions. A professional, hungry loan officer will make things work.
If your last option is a land contract or lease option, retain counsel. If the seller doesnt need his equity and has no other buyers, they may bite. But you need to protect both parties interest. Beleive me the sellers interest will be, as TS noted above. Most difficulties arise in land contracts when the seller defaults on his loan, and the property is foreclosed upon. You're out your money and home. Get represented by an ATTORNEY who has a real estate practice.
Luck
Alac