Am I getting screwed buying this house?

I am trying to purchase a home that has been nothing but problems from the start. I am getting an FHA loan, which requires the house to be "perfect" before I can close. I was told that we would close before the end of the year 2009 so that I may get my $6500 tax credit on this coming years taxes....well, I have put out of pocket almost $4,000 into this home, that would include 1 years insurance up front, bank fees (already paid) and appraiser fees and inspection fees. Not to mention, the home needed some work per FHA guidelines, so I have paid for most of those because the seller didn't have the money to cover the costs. (I don't either, but I want the home). We didn't close by December 31st because we had to have some repairs done. Then we were to close by Monday, January 4th, but FHA required that I install chimney caps which cost me another $200. So that inspection cleared on Tuesday, January 5th. Yesterday, I got the ok that we would close today, January 7th. I was told to put utilities in my name as of today - let me remind you, I have been paying insurance on this house as well since January 1st. My agent called me yesterday right before I switched the utilities to my name and said we can't close because the seller owes $23,000 on the home now and doesn't have the funds to cover it. It could be late next week before we close. I am locked in at my rate just until Monday.....I am packed, was supposed to be out of my apartment by the 1st ofJanuary so had to pay another months rent....If I walk away now, I am out all my money. (Well, all the money I had saved for my daughters college fund) and I won't get any of it back except for the Insurance ($600)!!!! Please advise!!! I'm stuck and don't know what to do.