For many people, the dream of homeownership is out of reach.

They live from paycheck to paycheck, with little left over to save for a down payment. Still, they fancy owning a home with a white picket fence.It's not an impossible dream, says Virginia Thompson, housing information coordinator of the Salt Lake office of the U.S. Department of Housing and Urban Development, HUD for short.

"Our biggest sales incentive right now is that $500 down payment, and we pay up to 3 percent of the closing costs," said Thompson during a recent interview. Buyers still have to qualify for a home loan for the balance of the selling price.

Judging by HUD's statistics, many do. More than $91 million in HUD properties in Utah were sold between September 1989 and September 1990. "We're the largest real estate seller in the state. Those are basically single-family homes," Thompson said.

HUD doesn't sell homes itself, but the residences are available for sale through any real estate agent. Agents who sell HUD homes receive a 6 percent commission at closing.

Unlike conventional real estate purchases in which the seller and buyer negotiate a selling price or the terms of the sale, HUD homes are sold by competitive bid. Bids are opened every Tuesday and the top bidder may purchase the home if the bidder qualifies for the loan.

Thompson said HUD properties are not necessarily giveaways that undercut the rest of the real estate market. "A lot of our properties are being bid up right now," she said. "If it's a clean, sharp property, we'll get as many as 40 bids on a property."

She said HUD's mission is to improve the existing stock of single-family homes in America, not unload real estate a bargain basement prices. "We don't want to come in and have a negative impact on either home values or the real estate industry. We pay property taxes on all our properties," she said.

HUD is the largest insurer of Federal Home Administration loans. When buyers default on their loans, HUD pays off the lending institution but retains the property and later sells it.

Most of the HUD homes are sold to young families, most of them first-time homebuyers. "We do sell to investors, but most of them (HUD buyers) are scraping together their $500 down and closing costs and getting into their very first home," she said.

HUD wants to make its homeownership programs as understandable as possible. This spring, for example, HUD will offer a homeownership class for people whose first language is Spanish.

Admittedly, HUD homes are not castles, but they are a steppingstone to better housing. "Some of the properties are pretty hammered, as you can imagine when a family loses their home they aren't left in very good shape," Thompson said.

But HUD also insures a loan program that enables homebuyers to borrow money to buy and rehabilitate HUD homes. The loan money can be earmarked for improvements ranging from room additions, remodeling bathrooms or kitchens to making the home handicapped accessible.

Thompson said HUD had only 510 homes in its inventory at the end of February, which may be a sign that the local economy has improved.

"The real estate market is strengthening. We don't see appraisals coming in much lower than what these homes originally sold for," she said. "The economy is stable, families are stable so people are able to make their payments, hold on to their jobs and even buy a home."