The FSA said it had no intention to prevent first-time buyers, many of whom take high LTV loans, from getting mortgages.
Its analysis showed first-time buyers were particularly good at repaying loans at high LTVs.
The MMR paper said: “There is no simple quantitative rule and we propose instead to proceed with a more rigorous assessment of affordability.
“First-time buyers do typically take on higher LTV mortgages but our analysis shows that they have a better record of paying mortgages at high LTVs than any other borrower type.
“We therefore do not have a particular concern about first-time buyers taking out high LTV mortgages and, as we have made clear from the outset, we do not propose to impose any type of LTV restriction on consumer protection grounds.”
FSA research revealed that first-time buyers are finding it particularly difficult to get mortgages today – but that is as a result of lenders increasing their deposit requirements in response to funding constraints.
Some 40% of sales to first-time buyers were at LTVs of 90% or over in the boom period 2005-2007.
That has reduced to less than 5% today.
The FSA added: “Many respondents and commentators have claimed that our affordability proposals will disproportionately impact on first-time buyers, preventing them from getting on the property ladder.
“In fact, our estimates indicate that first-time buyers are hardly impacted at all by our affordability proposals in today’s subdued market conditions (0.9%) and are slightly less impacted than other borrowers in a boom period (10.5%).”
