It is all very unfair on yourselves.
I would be tempted to say that you want to have a lovely family meal and then, at a later date, sit down to discuss a few things. They need to forget the dream house for a moment and think about the bigger picture.
If the young couple can't save an extra £5 k deposit themselves, are they going to be able to afford to live in this house, if one of them loses their job? They have to furnish the place. If they have a baby, one of them might stop work for a time. Better to forget the 'dream' and just go for an affordable place, maybe getting a lodger in, too.
Your husband has suffered with his work. If they push you both into something unaffordable, then you won't be able to support yourselves at that home, or give them a temporary roof over their heads, if they ever need to come back to stay with you. You'll have to radically fownsize.
Spell out that there has been a pandemic. This is not the best time to be moving into dream houses that you can't afford. Any or all of you could lose work, in the near future.
What is actually wrong in the couple waiting a couple of years, taking on some weekend work and saving a bit more? If you can't do it, then don't. There may be other relations who can help out: grandparents on her side. They come forward, once it is clear to them that DH can't afford to help his son with the deposit.
There may be cheaper, part rent/ part buy options which they could look at.
But obviously, from the outside, on this forum, it does look as though something may have raised DSS expectations - if the girlfriend is crying in the background, and he is sending out photos of the house they expect to buy. I think you need to wonder whether your DH has given the impression to them that he is going to try to find them the way to get the money, and that he thinks they should get the house.