Shapps has launched the FirstBuy scheme, specifically designed to help those struggling to buy their first home due to the need for large deposits.
Through FirstBuy, the Government and housebuilders together will offer a 20% equity loan, which alongside a 5% deposit from the buyer will enable them to take out a 75% mortgage on the rest of the property.
Loans will be repaid on resale of the property, with the Government's share available for reinvestment in more affordable housing. The first homes are expected to come on stream in September this year.
Shapps confirmed that over 100 housebuilders will take part by offering their new-build homes to first-time buyers.
FirstBuy is predicted to help over 10,000 first-time buyers in England over the next two years, with up to £500 million being available across the UK.
And because the scheme is only available on new-build properties, it will offer a much-needed shot in the arm to the housing market and the construction industry - supporting thousands of jobs, according to the Housing Minister.
Subject to contracts signed over the summer, housebuilders that will be able to offer homes for sale through FirstBuy will include: Persimmon Homes, Barratt Homes, Bovis Homes Limited, CM Yuill Limited, Galliford Try Homes, Morris Homes Limited, Radian; and The Miller Group Limited.
Lenders are also backing FirstBuy by preparing to offer 75% mortgages to those first-time buyers making the most of the scheme. They include: Halifax, Nationwide, Barclays; and The Melton Mowbray Building Society.
Commenting, Grant Shapps said: "With 80% of young first-time buyers depending on parental help, I am determined that we pull out all the stops to help those who want to take their first steps onto the property ladder.
"FirstBuy will do just that - a Government-backed scheme making £500 million available to offer a valuable alternative to the Bank of Mum and Dad. Over the next two years, this will help as many as 10,000 people in England to get that much-needed deposit together and realise their dreams of owning their own home.
"And because this help will be available on newly-built properties, it will also offer a much-needed boost to our housebuilding industry, supporting thousands of jobs across the country."
Stewart Baseley, executive chairman of the Housebuilders Federation, said: "Firstbuy will help first-time buyers, boost economic growth and provide a vital shot in the arm for the house-building industry. Our members have reacted decisively to support FirstBuy and recognise the scheme is an important first step."
Grenville Turner, chief executive of Countrywide, said: “We are pleased that the government is moving quickly with the launch of this initiative. We believe that this will give a much needed boost to the first-time buyer market and also underpin the New Build/Developer market which has experienced difficulty over the last three years.
“However, in order to ensure that this initiative delivers, the government, developers and fellow mortgage and estate agency intermediaries will need to work together to advise buyers and ensure that they fully understand the benefits of this scheme.”
