Around 10,000 families could be helped to gain a foothold on the property ladder as a result of a new initiative announced in today's Budget.
George Osborne announced that thousands of would-be buyers with just a 5% deposit will now be able to buy a new property.
The £250 million programme will be funded by the increased levy on banks.
The Chancellor said it was 'unfair' that many families have been unable to buy their first home because of the high deposits that are required.
It is predicted that the programme will protect around 10,000 jobs in the construction industry.
First time buyers with a joint income of less than £60,000 will be eligible for the scheme that will see their small deposits boosted by a loan worth 20% of a property's which will be jointly provided by the Government and housebuilders.
The loan – which will attract no interest for five years and will not have to be paid back until the home is resold – will allow house buyers to purchase their property at the 75% loan-to-value tier.
This will mean first time buyers will escape the higher repayment levels they would face if buying at the 90% LTV or 95% LTV tiers.
The Chancellor also announced that the Mortgage Interest Scheme which helps families out of work keep up with their repayments will continue for another year.
Speaking before the Budget was formally announced, Ian Ward, chief executive of Leeds Building Society, said: " We welcome the support package for first-time-buyers that is expected to be announced today by the Chancellor, George Osborne.
"We know from our own experience that the biggest barrier to homeownership can often be saving for a deposit, and this scheme is a positive step by the Government."
The issue of first time buyers has become a hot topic in recent years as many have struggled to gain access to affordable credit or have been able to save sufficiently for a deposit.
Following calls for innovation in the market, Lloyds TSB recently announced it was to launch a pilot scheme that would see local authorities lending first time buyers a 20% deposit in the form of an equity loan with applicants providing the remaining 5%.
Stephen Noakes at Lloyds TSB said the scheme, which like the Government initiative will allow first time buyers to repay rates at the 75% LTV tier, will help achieve and maintain a sustainable housing market.
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