Couples with a joint income of less than £60,000 and a 5% deposit will be eligible to apply to the Department of Communities and Local Government and house builders for a top-up low interest loan worth 20% of the property value.
The loans are interest-free for five years and then charge around 1.75%, rising by 1% above inflation each subsequent year.
Osborne is reported to hope the move will support 40,000 construction jobs as well as provide access to homeownership for hopeful first-time buyers.
Charles Haresnape, managing director of residential mortgages at Aldermore, said: “It's good to see the government acknowledge the plight of first-time buyers, but the scheme due to be announced in today’s budget is more of a political gesture than a serious attempt to help hard-pressed home buyers.
“Last year, there were 194,600 first-time buyers - a dramatic reduction from 568,200 in 2001. The government's proposed scheme will help just 10,000 first-time buyers get a foot on the property ladder. It's better than nothing, but we shouldn't fool ourselves into thinking that by itself this scheme will kick-start the first-time buyer market into action once again."
