Problem with ABS and brake light on Ford F150?

I have a 2001 F150. Front brakes replaced a few months ago.
Last night, I realized my rear brake lights weren't working. I'm not sure how long they've been out or if it's related to the bigger problem.
While testing the brake lights by pressing the brake pedal, the pedal seemed to give out and sink lower.
While driving the brakes worked but only when I pushed the pedal all the way in. Eventually the ABS light came on and stayed on.
Any advice?

1st guess: Master Cylinder
2nd guess: ABS valve
3rd guess: leak in system like a wheel cylinder or brake line.

If I had a money tree in my backyard and the mechanic I use wasn't on vacation, I'd take it somewhere else, say "fix it" and hand them a blank check. But I'm trying to get this done in the most economical way possible and I'd like to know the problem beforehand.

In words so simple that even YOU should be able to understand… The car is broken. Get it fixed.