The £300m HomeBuy Direct scheme is aimed at getting up to 10,000 first-time buyers into affordable housing in the next two years.
Any first-time buyers with a household income under £60,000 will be able to apply for a loan.
The potential home owners will be given the chance to buy newly built properties and offered an equity loan of up to 30% of the value of the property, co-funded by the government and the developer.
David Hollingworth, mortgage specialist at London & Country, says anything that helps the new-build market is good news, but it will need lenders to support the scheme.
He says: “HomeBuy schemes already exist and they have not had a huge impact on the mortgage market. Anything that would help the new build market is a positive, but lenders have been sceptic about the market, for the scheme to work it would need their support.”
The Chartered Institute of Housing has welcomed the scheme, which it believes will support the construction industry, help first-time buyers and stimulate sales in the housing market in the short-term.
But it says support must only be available to people who are able to sustain homeownership in the long-term, and the details of what properties are covered and any fees will be important.
Sarah Webb, chief executive at CIH, says: “Today’s measures across three government departments can make a genuine difference to the lives of many vulnerable people, and provide a short-term boost for aspiring homeowners and the construction industry.
“But it is not the silver bullet which will solve the problems in the financial markets. Increased liquidity in the financial markets remains the key and the final Crosby review will be critical in achieving this.”