The new Your First Home scheme will allow eligible first-time buyers in England to purchase a new-build home with a deposit of just 2.5%, backed by a Government equity loan worth up to 20% of the property value.

Full details are due to be unveiled at the Budget on 28 October, including household income limits, regional property price caps and the timetable for launching the scheme.

The equity loan will carry an initial interest-free period, while developers joining the programme will be expected to contribute towards its costs.

Taylor Wimpey chief executive Jennie Daly said: “We welcome the Government taking action and recognising the significant challenges facing both first-time buyers and the housing industry.

“Helping families onto the housing ladder is vital, and a healthy housing market drives economic growth, supporting jobs, investment and communities across the country.

“Whilst developers have worked hard to support buyers and sustain delivery in challenging conditions, a targeted Government support scheme has an important role to play.”

The Home Builders Federation also called for the scheme to be rolled out quickly.

HBF chief executive Neil Jefferson said a well-designed programme had the potential to make a “real difference” to households struggling to buy and said it needed to work for builders of all sizes and across different parts of the country.

Construction Products Association economics director Noble Francis said the intervention came as house building remained well below historic levels.

He said: “The CPA had been calling for a new first-time buyer equity loan scheme for new-build housing, and so the Government’s announcement of ‘Your First Home’ is an important step to prevent house building from falling further in the near-term and then to boost housing supply in the medium-term.”

But Francis warned that viability remained a major constraint in lower-value housing markets and said the impact of the scheme would depend heavily on the price caps and income thresholds.

Your First Home marks a return to a model similar to the former Help to Buy equity loan programme.

That scheme supported 387,195 purchases in England between April 2013 and May 2023, including 328,346 by first-time buyers, with Government equity loans totalling £24.7bn.