2022 Maryland first-time homebuyer assistance programs

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.

Purchasing your first home can be intimidating and expensive. As you go through the homebuying and mortgage process, you’ll encounter both big price tags and unfamiliar situations. Luckily, both the federal government and the Maryland state government offer programs to help first-time homebuyers navigate and afford this major purchase. You can also work with a financial advisor to help you prepare your finances and find the right mortgage program for your situation.

To help first time home buyer maryland, 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.

Freddie Mac and Fannie Mae are federal government-sponsored mortgage lenders with a number of first-time home buyer programs. While technically two different entities, they offer very similar benefits suitable for anyone buying a first home.

The HomeReady® loan from Fannie Mae requires a down payment as low as 3%. This makes it a great choice for anyone who’s strapped for cash, has a credit score of at least 620 and makes an income at or near the U.S. median. With a HomeReady® loan, you must have private mortgage insurance at the time of purchase, though you can cancel it once you’ve accrued 20% equity in your new home.

Freddie Mac, on the other hand, offers Home Possible® mortgages, with a down payment of just 3%. Home Possible® loans come in 15- to 30-year fixed-rate and 5/5, 5/1, 7/1 and 10/1 adjustable-rate terms. You also will not need any credit history for this loan.

Baltimore first-time home buyers

The median home price in Baltimore was $210,000 in April 2022, according to Realtor.com. That was actually down 2.2% year-over-year.

If you want to buy a home at that median price, your down payment options might fall between:

• $6,300 for 3% down payment
• $42,000 for 20% down payment