The new mortgage guarantee scheme, revealed in Chancellor Rishi Sunak's Budget, will be available to current homeowners as well as first-time buyers looking for a property worth up to £600,000.
What will it mean for first-time buyers in Falkirk?
In December, first-time buyers in the area spent an average of £115,660 on their property, according to Land Registry figures.
A 5% deposit on a home costing this much would be £5,780 and raising the 95% mortgage would require a household income of £30,520.
That's based on what housing charity Shelter says is a "typical" loan to income ratio of 3.6 – that is, a mortgage lender will allow a household to borrow 3.6 times their gross income for a home purchase.
Office for National Statistics data reveals that the gross median salary of a full-time employee in Falkirk was around £30,110 in 2020.
The median is a measure used to exclude extreme values which could skew the average.
The 2019 Scottish household survey reveals the highest proportion (20%) of owner occupied properties contain two adults aged between 16 and 64.
Two people living and looking to buy their first home together in Falkirk, with a combined median salary of £60,220, could therefore particularly benefit from the scheme.
Richard Donnell, research director at UK property portal Zoopla, said supporting buyers with small deposits is key to widening access to home ownership.
He added: "Our analysis shows the scheme will have the greatest benefits for buyers in lower value housing markets in northern England and Scotland, where a 95% mortgage is more attainable.
“The scheme will have less impact for buyers in southern England, where high house prices are a major barrier to being able to afford a 95% mortgage. This all supports the levelling up narrative and policy approach of Government.”
The scheme, available from April, will provide a guarantee to lenders across the UK who offer mortgages to people with a deposit of just 5%.
Buyers will also have the option to fix their initial mortgage rate for at least five years, giving them certainty over their repayments.
It will be available for new mortgages on new or existing properties up to December 31 2022.
But Polly Neate, Shelter chief executive, criticised the Government's latest attempt to help people onto the housing ladder as "peddling pipe dreams".
She said: "Sadly, the mortgage guarantee announced by the Chancellor is pure window dressing.
"Research shows it won’t help most renters and has no hope of turning ‘Generation Rent’ into ‘Generation Buy’.
"Two-thirds of private renters have no savings at all, and there is no way they can scrape together the cash needed to afford a 5% deposit, nor do they have the kind of income that would support a huge mortgage."
She added that the Government should provide "meaningful solutions" to the housing crisis, including building more social homes that people can afford to live in.