To date, the scheme has supported 24,000 households, with 85% of all loans going to first-time buyers.
"While the industry should be supportive of anything that helps get people on the property ladder, having a very high loan-to-value mortgage does expose buyers to the risks of negative equity."
The government-backed 95% mortgage guarantee scheme has been extended by a further year.
The scheme, which launched in April 2021 and was due to close at the end of December, is designed to encourage lending at 95% LTV.
The scheme allows both first-time buyers and current homeowners to purchase properties up to £600,000 with a 5% deposit.
It can be used for mortgages on both new build and existing homes, and by first-time buyers, home movers and those re-mortgaging.
To date, the scheme has supported 24,000 households, with 85% of all loans going to first-time buyers.
Chief Secretary to the Treasury, John Glen, said: "For hard-working families facing today's challenging economic conditions, it is right that we continue to help them secure their first home or move into their dream house.
"Extending this scheme means thousands more have the chance to benefit and supports the market as we navigate through these difficult times."
