Nationwide Building Society has signed up to the coalition government's Help to Buy mortgage scheme.
The programme offers equity loans of up to 20 per cent for buyers of new homes who in return must pay a deposit of at least five per cent on the property.
One of the mortgage products Nationwide will make available through the scheme is its new 2.54 per cent two-year fixed rate package.
Tracie Pearce, head of group mortgages at Nationwide, said: "We are accepting Help to Buy applications as we are keen to support the government's efforts in helping themortgage market to move forward."
However, only homes valued under £600,000 will be applicable - leaving some larger city centre homes in London excluded from the new system.
The news will come as a significant boost to the government, which has struggled to rally providers behind its flagship home-buying scheme.
It is unclear if other major banks and building societies will follow suit or wait to see how popular uptake is before investing in the Help to Buy programme.