The second phase of Help to Buy is confusing buyers who are in danger of feeling "misled" because the scheme doesn't offer the guarantees they expect.
Almost one month after the scheme was launched, four out of 10 first-time buyers and home movers say they don't understand how it works or will benefit them, according to new research from the Building Societies Association.
Even more worryingly, one in 10 first-time buyers think Help to Buy gives them financial protection if they can't keep up with their monthly repayments or house prices fall.
The research also showed that almost one in three first-time buyers and home movers don't know if there is a difference between a 95% LTV mortgage from a lender which has signed up to the scheme, and a 95% LTV mortgage from a lender that hasn't.
Nearly one in five first-time buyers and homemovers wrongly believe they can borrow more through Help to Buy than on a standard 95% LTV loan.
And more than one in 10 believe their monthly repayments will be lower if they take out a Help to Buy mortgage guarantee loan.
One in 10 first-time buyers believe the scheme will protect them if they can't keep up their monthly repayments, and a similar number believe it will cover them if their house price falls.
Homemovers are clearer on these two points, with just 5% believing the scheme gives this kind of protection.
Finally, almost one in four first-time buyers and say that they are more likely to be approved for a Help to Buy mortgage than a standard deal.
None of these assumptions are true, said Paul Broadhead, BSA head of mortgage policy. “It is unsurprising that some consumers are finding the Help to Buy: Mortgage Guarantee Scheme difficult to get their heads round.
"The situation has been complicated by the launch of two very different schemes, both called Help to Buy.
“It is essential that providers offering loans under the scheme leave applicants in no doubt about the terms of their mortgage loan. I am particularly concerned that a reasonable minority of active first time buyers believe that they can borrow more than normal and that they are in some way protected – neither assumption is true.
"In fact a 95% mortgage through Help to Buy is exactly the same as a standard 95% mortgage. It is vital that these myths are dispelled at application to prevent the possibility of consumers misunderstanding their mortgage loan and later feeling misled."
These results were back up by another piece of new research, from the RICS, which showed almost one-third of first-time buyers don't understand the processes involved when purchasing their first home.
Over a quarter of first time buyers also admit to not knowing the difference between a market valuation, an agent’s appraisal and a survey.
Failing to grasp these fundamentals could create big problems for buyers and sellers alike and, in some cases, could lead to unexpected costs and even potential transactions falling through.
The RICS has today launched a set of free, consumer-friendly guides to help buyers and sellers understand exactly what to do and how to avoid any pitfalls.
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