Tim Ortega had all but given up on his homeownership hopes.

Living in Kearns and working in residential construction, the lifelong renter saw firsthand how the credit crisis and mortgage meltdown were keeping the American dream out of reach for working families.

But earlier this year, a nugget in the newspaper advertising 3 percent fixed-rate mortgages -- with no money down -- caught his eye.

"I'd been renting and renting for 30 years and my landlord wanted to raise the rent really high," Ortega said. "We realized this was our only avenue at this point in our lives."

Ortega, along with his wife and twin daughters, feared the ad was too good to be true. They were thrilled to be wrong.

For years, Salt Lake City's First Time Home Buyers Program has helped low-income families unable to score home loans. And now, despite a housing market in chaos, the program is humming -- indeed buying and even building more homes than ever.

"Surprisingly, we've had less people apply" during the economic slide, shrugged city grant specialist Sara Richardson. "Some people are really afraid of owning a home right now."

Perhaps they shouldn't be. As Ortega was happy to learn, residents with a lower-than-average income can snatch federally insured mortgages -- often at a 30-year 3 percent fixed rate -- for just $500 in closing cash.

Qualifications for the program are simple. Interested buyers must be 18 and a legal resident who has not owned residential property in at least three years. They must have household incomes at 80 percent or lower of the median level ($52,250 for a family of four), along with no pending collections nor bankruptcy within the past two years. Finally, they must have a family size suitable for the property and agree to attend homeowner-training classes, including credit counseling.

LuAnn Clark, director of Housing & Neighborhood Development, relishes the chance to give families their first crack at a home.

"It's a good opportunity for people to buy now because prices are falling," she said. "With that good interest rate, you can get into a home now without having to wait."

Richardson notes the program is unusual because it focuses on finding homes that fit a particular family's needs.

Most of the homes are below $200,000, range from two to four bedrooms and have garages and updates. Eligible owners must stay in the house 15 years to obtain a clean title and collect the full equity.

The city, according to Richardson, is constantly looking for new listings or foreclosed properties to purchase.

"It's also a way to make our neighborhoods a little more vibrant," Richardson added. "And to keep these from becoming rentals."

Next month, the program will add yet another wrinkle. That's when five new homes, built on Navajo Street on the city's west side, become available for people on the waiting list.

The city, which places people in 10 to 15 properties per year, usually can complete the application process within two weeks.

That came this summer for Ortega, who was able to move in August into a three-bedroom bungalow on a tree-lined street in Rose Park. Suddenly, his 8-year-old twin girls can skip across the street to school.

"It's a good school and actually a better neighborhood than where we were before," he smiled.

And for just $758 a month, Ortega said, his improved life actually costs less than apartment living.

"It really seems like a godsend to us."

djensen@sltrib.com