Buying your first home in Maryland can feel daunting, with a competitive real estate market and home prices on an upward trend. As of the beginning of 2021, the average sale price in Maryland was about $387,100, up more than 14 percent from the year before, according to the Maryland Realtors association.
To help homebuyers, the Maryland Department of Housing and Community Development offers a range of options through the Maryland Mortgage Program, which includes 30-year fixed-rate conventional and government loan options along with down payment assistance. The program helps make it more affordable for Maryland homebuyers to purchase and own a home.
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. There is also a special program designed to help those with student loan debt buy a home.
- 1st Time Advantage Direct – Maryland’s 1st Time Advantage Direct loan offers competitive interest rates for first-time homebuyers. It does not come with down payment assistance, however, unlike other 1st Time Advantage loans.
- Flex Direct – Like 1st Time Advantage Direct loans, Flex Direct loans come with competitive 30-year fixed rates, but are also open to repeat homebuyers and can be combined with a mortgage credit certificate. Flex Direct does not come with down payment assistance.
- 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 debt payoff is up to 15 percent of the home’s purchase price, with a cap of $30,000. 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.
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.
- 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 and loan-to-value ratios
- FHA loans: 660
- VA 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.
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 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
Besides Maryland state homebuying programs, there are many national first-time homebuyer programs that can help you afford homeownership. FHA, VA and USDA loans, for example, 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.
For other Maryland homeownership programs, including by city or county, visit HUD.gov.
As you embark on your first home purchase, be sure to check Maryland mortgage rates and compare multiple loan offers. If you’re interested in the Maryland Mortgage Program, you can connect with a few of over 100 state-approved mortgage lenders 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 loans, check this list of specially-qualified lenders.