The scheme was originally meant to close to applicants on 31 March 2021. Since it was introduced in 2014, it has been used to purchase 10,215 homes in Wales.
The third phase of Help to Buy Wales will introduce changes from April 2021 including the reduction of the price cap from £300,000 to £250,000 and all homes being broadband ready.
Julie James, the minister for housing and local government, said: “Ensuring everyone in Wales has access to a good quality, safe and affordable home is this government’s ambition. I am pleased to announce our intention to extend Help to Buy Wales until March 2023, subject to the availability of funding beyond 2020-21 from the UK government.
“I have said I am committed to providing affordable housing and should funding not be provided by the UK government, than Welsh government will commit to funding phase three of Help to Buy Wales for at least a further 12 months, until March 2022.”
She added: “I want to ensure support is available to all those who need it when making the most significant purchase of their lifetime and allow developers to plan for their future.
“We will continue to work with developers and all stakeholders over the coming months to ensure homes purchased using Help to Buy are not just of good quality but are broadband ready to allow homeowners to have instant access to essential services.”
There have been calls from the industry to extend the scheme across the country.
Mark Hayward, chief executive, NAEA Propertymark said: “We welcome this initiative as it will help first time buyers who are currently under pressure when applying for mortgages as a result of lenders clamping down on their lending criteria. We wait with interest to see if this extension will be adopted UK wide.”