Maryland First-Time Home Buyer Programs of 2021

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By NerdWallet 
Maryland First-Time Homebuyer Programs

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Whether you want to live in the hills of western Maryland or the historic neighborhoods of Baltimore, buying your first house can be intimidating. Knowing where to find the right loan and assistance programs makes the process easier, especially if you have less-than-perfect credit or need help with a down payment.

Learn more about the first-time home buyer programs available from the Maryland Department of Housing and Community Development, or DHCD, as well as national loan programs that may benefit you.

National first-time home buyer programs

These loans, available in all 50 states, offer flexible underwriting requirements that come in handy when you're a first time home buyer. If you've had credit issues or struggled to save up a big down payment, be sure to explore these national mortgage options.

Conventional mortgage

Best for:

Low down payments, limited mortgage insurance premiums

What you need to know:

A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government. Conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Mac allow down payments as low as 3% for first-time buyers or lower-income home buyers. Unlike FHA loans, conventional loans allow borrowers to eventually cancel their mortgage insurance or avoid mortgage insurance altogether if they put at least 20% down.

VA loans

Best for:

Military, low down payments

What you need to know:

The U.S. Department of Veterans Affairs helps service members, veterans and surviving spouses buy homes. VA loans are especially generous, providing competitive interest rates, often requiring no down payment or mortgage insurance. Although there is no official minimum credit score, most VA-approved lenders require scores of at least 640.

FHA loans

Best for:

Low credit score, low down payments

What you need to know:

This is the go-to program for many first-time home buyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment for a score that low. Mortgage insurance is required for the life of an FHA loan and cannot be canceled.

USDA loans

Best for:

Low down payments, rural

What you need to know:

A USDA home loan is a zero-down-payment mortgage for eligible rural and suburban home buyers. USDA loans are issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations, which vary by region. Applicants with credit scores of 640 or higher receive streamlined processing. Those with scores below that must meet more stringent underwriting standards.

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DHCD highlights and eligibility requirements

The Maryland DHCD offers mortgage and financial assistance programs to make homeownership more accessible, especially for first-time home buyers.

If you haven’t owned residential property in the past three years, you're purchasing a home in a targeted area, or you're a veteran using your exemption for the first time, you’re considered a first-time home buyer in Maryland.

Even if you’re a repeat buyer, you may still be eligible for a DHCD mortgage if you meet income limits and use one of their Flex loans. A Maryland state-approved lender can help you explore your options and eligibility.

Highlights

  • 30-year mortgages with competitive interest rates.

  • Down payment and closing cost assistance, including non-repayable grants.

  • Rate discounts available to some borrowers.

  • Some programs can be combined for added savings.

Eligibility

  • Borrower must meet income guidelines, which vary by location and household size.

  • Borrower’s liquid assets, including gifts, can’t exceed 20% of the purchase price.

  • Property must be the borrower’s primary residence.

Maryland first-time home buyer loan programs

Maryland Mortgage Program 1st Time Advantage

Best for:

Low mortgage rates, down payment assistance, closing cost assistance

What you need to know:

DHCD's 1st Time Advantage loans allow qualified first-time home buyers to get the lowest fixed interest rates available from the Maryland Mortgage Program. One option is the 1st Time Advantage Direct loan, which tends to offer the most competitive rates and allows borrowers to use external forms of down payment assistance. Another option is the 1st Time Advantage 5000 is a no-interest, $5,000 loan that can be used for down payment or closing costs; you don't need to repay it until your original mortgage ends. Finally, the 1st Time Advantage 3% loan offers down payment assistance equal to 3% of the first mortgage amount. These loans can't be used in conjunction with DHCD's mortgage credit certificate program, if that program is active.

Flex Loans

Best for:

Low mortgage rates, down payment assistance, closing cost assistance

What you need to know:

Flex loans can be used by first-time or repeat home buyers, and offer competitive 30-year, fixed-rate home loan products. Flex Direct generally offers the best rates, but doesn't include down payment assistance. Flex 5000 boasts a $5,000, no-interest loan for down payment and closing costs that isn't due until that first mortgage ends.

For those who meet additional requirements, Flex 3% and Flex 4% loans offer grants equal to 3% or 4% of the original mortgage cost that don't need to be repaid. If you're a first-time home buyer, you may be able to layer a mortgage credit certificate when available onto one of these loans.

Maryland SmartBuy 2.0 mortgage

Best for:

Outstanding student loans

What you need to know:

If you’re buying a home in Maryland, this program could help reduce your student debt. To qualify for the SmartBuy mortgage, you must have at least $1,000 in student debt. This program provides financing up to $30,000 to pay off your student loans before you purchase a home.

Partner Match

Best for:

Down payment assistance, closing costs assistance

What you need to know:

Some employers, home builders, real estate developers, community organizations and local governments offer their own financial assistance programs for home buyers. If you get financial assistance from another organization and choose a Maryland DHCD mortgage, the state of Maryland will match those funds up to $2,500. Partner Match funds are provided in the form of a no-interest deferred loan, so no payment is required until the mortgage is paid off.

Summary: 2021 Maryland DHCD first-time home buyer programs

  • MMP 1st Time Advantage offers eligible first-time homebuyers low interest rates on 30-year fixed-rate mortgages.

  • MMP Flex Loans provide grants or no-interest, deferred loans for down payment and closing cost assistance.

  • The Maryland SmartBuy mortgage will help pay off your student debt.

  • Partner Match equals the financial contribution you receive, up to $2,500, from an employer or other organization.

For full details on any of the programs listed above, visit the Department of Housing and Community Development website.

If you’re ready to take the next step in your homebuying journey, contact a participating lender to discuss your options. Note that each lender may have rules about eligibility and how much you can borrow.

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