Plans for a £1m fund to help first-time buyers in Conwy with deposits for a mortgage have won backing.
Conwy council cabinet passed a scheme to invest the money as a bond to help people get on the property ladder.
The plans, which still need to be endorsed at a full council meeting, would provide a financial guarantee to the lender but will not give money directly to buyers.
The scheme is being considered by other councils in Wales.
A report to the council's cabinet said: "The turmoil in the financial and banking sectors has had a negative effect on the economy and on the local housing market.
"There has been a particular impact on first time buyers because of the general reduction in loan to value mortgages from 95% down to 75%, necessitating a deposit of some 25% of the house value."
The council would put up a guarantee to cover the difference between what banks and building societies would normally lend, and what the borrower needs to buy.
Gareth Jones, a 37-year-old first-time buyer from Llansannan who is struggling to buy his first home, said: "It's quite depressing sometimes".
"You need a deposit to the tune of £30,000, depending on where and what you want to buy.
"I've got less than £10,000 in savings and I've just gone back to college to train as a teacher, so I'm not going to be saving much for a while yet.
Llanrwst estate agent Iwan M Williams said some young people have had help from their families with their house deposit.
"What we are finding is that the prices have come down and first time buyers are out there," he said.
"On paper it should be the best time ever to buy because interest rates are low, house prices have come down but yet they can't buy because they haven't got a deposit.
"It is very frustrating for us because we're seeing investors coming in, buying what should be first time buyer homes and leaving local people and young people without any homes."
Plaid Cymru councillor Meirion Hughes stressed the council would not be paying anyone's mortgage, but would be putting up a guarantee to allow banks and building societies to lend more.
"Any help we can give to keep the housing market moving and help people move into homes will also help stimulate the economy in Conwy," said Mr Hughes, the council's cabinet member for finance and resources.
"I think the big problem for everyone at the moment is uncertainty, and this scheme will enable first time buyers to have confidence and also the sellers to have confidence."
If the buyer defaulted on the mortgage, the council would have to pay back the part of the loan it had guaranteed.
Mr Hughes said the council will be taking steps to keep the risk to a minimum and the maximum value of the property to qualify would be £140,000.
The plans will have to be approved by the full council in October.
The authority hopes the scheme could be operating by the spring.
Across Wales, the lack of mortgage finance meant the Welsh housing market remained subdued last month, according to the latest RICS housing market survey which found that, on average, each chartered surveyor was making only three sales a month.