Buying your first home in Maryland can feel daunting, with a competitive real estate market and home prices on an upward trend. As of December 2021, the average sale price in Maryland was over $430,000, according to the Maryland Realtors association, and homes sold quickly, too: a median 10 days on market.
To help first-time homebuyers in the state, the Maryland Department of Housing and Community Development offers the Maryland Mortgage Program, designed to make the dream of homeownership a reality.
Maryland first-time homebuyer loan programs
There are two main loans in the Maryland Mortgage Program: 1st Time Advantage loans, which assist first-time homebuyers specifically; and Flex loans, which can be for first-time or repeat buyers.
Maryland also sets itself apart with a special home-buying program for anyone with student loan debt. Additionally, if you or one of the members of your household is living with a disability, you might be able to qualify for assistance through the state’s HomeAbility program.
- 1st Time Advantage – Maryland’s 1st Time Advantage loan offers competitive interest rates for first-time homebuyers. There are also options for down payment assistance between $5,000 (1st Time Advantage 5000) or up to 3 percent of the purchase price (1st Time Advantage 3% Loan).
- Flex – Like 1st Time Advantage loans, Flex loans come with competitive 30-year fixed rates, but are also open to repeat homebuyers. The Flex program includes down payment assistance in the form of a no-interest loan that must be repaid or a grant (free money).
- Maryland SmartBuy 3.0 – If you have at least $1,000 in student loan debt, the SmartBuy 3.0 program can help you get a mortgage and pay off that debt in one transaction. The amount you can apply to student loan debt payoff is up to 15 percent of the home’s purchase price, with a cap of $30,000. This is a zero-interest, forgivable loan after five years. To qualify, you must meet all the requirements for the Maryland Mortgage Program, and the transaction must fully pay off the student debt of at least one of the borrowers of the loan.
- HomeAbility – If you or a member of your household is living with a disability, the HomeAbility program offers two separate loans: one for 80 percent of the purchase price and an additional zero-interest loan up to 25 percent of the price. The income limits are lower than limits for other loan programs, but this program comes with the benefit of no mortgage insurance.
Among eligibility criteria, all Maryland Mortgage Program mortgages generally require that:
- You purchase a primary residence and don’t own another residence.
- The home is within Maryland purchase price limits, which range from $311,980 to $879,943 depending on location.
- Your combined household income — of all adults living on the property — does not exceed Maryland limits.
- You complete homebuyer education or counseling.
The credit score minimums are as follows:
- Conventional loans: 640-680, depending on debt-to-income (DTI) and loan-to-value (LTV) ratios
- FHA loans: 640 (automated underwriting only)
- VA loans and USDA loans: 640
Note that a first-time homebuyer is defined as a buyer who hasn’t owned a home in the past three years. If you’re not a first-time buyer, you could still be eligible for a 1st Time Advantage loan if you’re buying in a designated “targeted area” or if you’re an honorably discharged veteran who hasn’t previously used your first-time buyer exemption.
Maryland down payment assistance
Whether you choose a Maryland 1st Time Advantage or Flex mortgage, there are several down payment assistance options you can pair with these types of loans.
1st Time Advantage 5000 and Flex 5000
The 1st Time Advantage 5000 and Flex 5000 programs provide $5,000 to use toward your down payment and closing costs. The funds come in the form of a zero-interest second mortgage. You won’t have to make any payments on the second mortgage until your first mortgage term ends, either when you pay the loan off in full, refinance it or sell the home. At that point, you must repay the $5,000.
Through these programs, you can also receive a “partner match” if you’ve obtained other down payment assistance, such as funds or a grant from an employer, community organization, home builder or local government. These programs will match that assistance, up to $2,500, through an additional zero-interest second loan. Browse this list of potential partners to see which organizations might be willing to help with your home purchase.
1st Time Advantage 3% and Flex 3%
The 1st Time Advantage 3% and Flex 3% loans provide a zero-interest second mortgage, equal to 3 percent of your first mortgage, as down payment assistance. Like 1st Time Advantage 5000 and Flex 5000, this loan is also eligible for down payment partner matches.
Flex 3% and 4% grants
If you’re seeking any of the Flex loan options, you could also be eligible for a grant equal to 3 percent or 4 percent of your first mortgage for your down payment or closing costs. The grant does not need to be repaid.
Other first-time homebuyer loan programs
Depending on where you’re looking to call home in Maryland, you might be eligible for additional assistance with your purchase. If you’re looking to live in Montgomery County — the neighboring county to the nation’s capital — the Montgomery Homeownership Program offers up to $25,000 of down payment and closing cost assistance. The money is a zero-interest deferred loan.
If you’re buying in Baltimore, there are several assistance resources, including a Live Near Your Work program, which offers grant funds from more than 100 employers and a matching incentive from the city; the Buying Into Baltimore $5,000 forgivable loan lottery; and other opportunities for purchasing a home in certain neighborhoods.
Besides state and local homebuying programs, there are also many national first-time homebuyer programs that can help you afford homeownership. FHA, VA and USDA loans offer flexible underwriting and require a minimal down payment or none at all. If you have a job in public service — for instance, as a firefighter, law enforcement officer or teacher — you might be eligible for the Good Neighbor Next Door program, as well, which also has a very low down payment minimum.
Ready to officially call yourself a Maryland first-time homebuyer? If you’re interested in the Maryland Mortgage Program, you can connect with a state-approved mortgage lender through the Maryland Department of Housing and Community Development’s website. Simply enter the name of the county where you’re looking for a home to find lenders in the area. A lender will then match you with appropriate financing and any down payment assistance programs you qualify for. For more information on the SmartBuy 3.0 program for homebuyers with student debt, check this list of specially-qualified lenders who have closed at least 10 SmartBuy loans.
With additional reporting by David McMillin