First Time Home Buyer Programs in Maryland
The state of Maryland provides certain first-time home buyer programs for its citizens as well as large municipalities offer some assistance programs that may benefit first-time home buyers. The state-level first-time home buyer programs are offered by the Maryland Department of Housing and Community Development (DHCD). Maryland DHCD is a government organization that promotes housing development over the whole state. This government department provides assistance to households, first time home buyers and even tenants. They have a Homeowner’s Assistance Fund that finances their activities.
Maryland State Programs | |||
|---|---|---|---|
| No | Program | Type | |
| 1 | MMP 1st Time Advantage | Main Programs | |
| 2 | MMP Flex | ||
| 3 | Partner Match | Add-On Programs | |
| 4 | Montgomery Homeownership Program VI | Other Programs | |
| 5 | HomeAbility | ||
| 6 | Maryland SmartBuy | ||
Federal Programs | |||
| No | Program | Type | |
| I | Conventional Mortgage | Fannie Mae and Freddie Mac | |
| II | FHA Loan | Federal Housing Administration | |
| III | VA Loan | US Department of Veterans Affairs | |
| IV | USDA Loan | U.S. Department of Agriculture | |
Maryland State Programs
All programs that are offered on a state level are offered by the same organization that has detailed information about each program. The programs usually offer a mortgage loan with down payment assistance as a second loan. The first loan has similar characteristics of a conventional loan while the second loan is a no-interest deferred loan. The interest rates for the first loans are updated daily.
| Interest Rates for First Loans for State Programs | |
|---|---|
| 1st Time Advantage Direct | Conventional - 6.250% |
| Government - 5.250% | |
| 1st Time Advantage 5000 | Conventional - 6.750% |
| Government - 6.375% | |
| 1st Time Advantage 3% | Conventional - 6.750% |
| Government - 6.375% | |
| 1st Time Advantage 4% | Conventional - 6.875% |
| Government - 6.500% | |
| 1st Time Advantage 5% | Conventional - 7.000% |
| Government - 6.625% | |
| Flex Direct | Conventional - 6.625% |
| Government - 5.625% | |
| Flex 5000 | Conventional - 7.125% |
| Government - 6.750% | |
| Flex 3% | Conventional - 7.125% |
| Government - 6.750% | |
| Maryland SmartBuy 3.0 | Conventional - 7.125% |
The Rates Are Accurate as of June 29th, 2022.
Main Programs
There are two main programs that are offered within the state of Maryland: MMP 1st Time Advantage and MMP Flex. Both programs are offered by the Maryland Department of Housing and Community Development (DHCD), and they have very similar mortgage products offered within them. The largest difference between the two programs is the fact that one is available only for first time homebuyers while the other is available for a broader range of buyers.
MMP 1st Time Advantage
This program is designed to provide eligible first time home buyers an opportunity to get the lowest fixed mortgage rate on a 30-year mortgage. This program has multiple products offered within, and they differ in the amount of down payment assistance they provide along with the main mortgage. The following list provides an overview of the products offered within MMP 1st Time Advantage program.
- 1st Time Advantage Direct
This loan product does not have any down payment assistance included. It has only a 30-year fixed mortgage included, which means that the borrower will have to pay for the down payment on their own.
- 1st Time Advantage 5000
This product provides a down payment assistance of $5,000 that comes as a second lien mortgage. The second lien loan is a 0% interest rate loan that is due at the expiration of the original mortgage. The funds can be used for down payment and closing costs, which allows the borrower to get assistance for the down payment and repay it later on without accruing any interest.
- 1st Time Advantage 3% Loan
This product provides a down payment assistance of 3% of the primary mortgage principal. This assistance comes in the form of a 0% interest deferred second lien.
- 1st Time Advantage 4% Loan
This product provides a down payment assistance of 4% of the primary mortgage principal. This assistance comes in the form of a 0% interest deferred second lien.
- 1st Time Advantage 5% Loan
This product provides a down payment assistance of 5% of the primary mortgage principal. This assistance comes in the form of a 0% interest deferred second lien.
- A First-Time Home Buyer (You Have not Owned a Home in the Last 3 Years).
- Household Income Must be Less Than Specified Area Maximum.
- A Borrower Must Have Less Than 20% of House Price in Liquid Assets.
- The Purchased Home Must Be a Primary Residence.
MMP Flex
This program offers 30-year, fixed-rate mortgage products that are combined with a no-interest second-lien loan for down payment and closing costs. The down payment assistance comes in the form of a no-interest deferred loan. This program contains three mortgage products that differ in the amount of down payment assistance provided. This program is very similar to MMP 1st Time Advantage, but MMP Flex is available for a larger range of people since it is not limited to first time homebuyers. The following list provides an overview of the products offered within the MMP Flex program.
- Flex Direct
This product does not have any down payment assistance included with it. It has only a 30-year fixed mortgage included without any second lien, which means that the borrower will have to cover the down payment and closing costs on their own.
- Flex 5000
Flex 5000 mortgage product provides a down payment assistance of $5,000 that comes as a no-interest second lien loan. The second lien loan is a 0% interest rate deferred loan that is due at the expiration of the original mortgage. The funds can be used for down payment and closing costs, which allows the borrower to get assistance for the down payment and repay it once the mortgage is paid off without accruing any interest.
- Flex 3% Loan
This product provides a down payment assistance of 3% of the primary mortgage principal. This assistance comes in the form of a 0% interest deferred second lien.
- Household Income Must be Less Than Specified Area Maximum.
- A Borrower Must Have Less Than 20% of House Price in Liquid Assets.
- The Purchased Home Must Be a Primary Residence.
Optional Add-Ons
There is a program available as an optional add-on for the main programs listed above. A borrower does not need to take the additional program as it may take more time to process, but it is a good way to save additional funds.
Partner Match
Partner Match program is exclusively available in conjunction with MMP 1st Time Advantage and MMP Flex. Partner Match cannot be used without one of the mentioned programs. There is a wide range of businesses and organizations who are willing to provide additional assistance for a buyer to purchase a home. These organizations include the following:
- Employers
Employers are interested in the long-term sustainability of their workforce. This means that they may provide certain incentives or support when an employee chooses to buy a home.
- Real Estate Developers
Real estate developers are interested in selling all of their properties built, which means that they may be willing to provide certain discounts and rebates to ensure that enough properties are sold.
- Community Organizations
Some community organizations may also promote homeownership by providing certain programs to local homebuyers. Most of the time, community organizations work with limited budgets, so they may not have as many programs available, but they may also provide advice and other types of support.
- Local Governments
Municipal governments often have their own first time home buyer programs that are available only in a specific municipality. These programs may provide additional assistance or a full mortgage at once.
Depending on the organization, the type of help could be different and could be in the form of a loan, assistance payment, a grant and other. Partner Match program matches the contributions made by one of the organizations mentioned above for up to $2,500. This means that this program can provide additional $2,500 if another organization provides this amount to a homebuyer with either MMP 1st Time Advantage or MMP Flex.
Other Programs
There are other programs that may be useful for some first time buyers. These programs have specific requirements that make them unavailable for most people, so it is not promoted as much as the main programs. Even though these programs may have stricter requirements, it is still important to look into them to ensure that you get the most benefit out of the available options.
Montgomery Homeownership Program VI
This program is a collaboration effort between Maryland Mortgage Program and Montgomery County. Montgomery Homeownership Program VI provides eligible homebuyers an opportunity to receive up to $25,000 in down payment assistance. This program is being funded by Montgomery County to help working families and first time home buyers to achieve affordable homeownership in Montgomery. The program provides DPA in the form of a second lien no-interest deferred loan, and the funds can be used towards down payment or closing costs. Talking to a lender may be helpful to learn whether you are eligible for the program and how you can benefit from it the most.
- Household Income Must be Less Than Specified Area Maximum.
- A Borrower Must Have Less Than 20% of House Price in Liquid Assets.
- The Purchased Home Must Be a Primary Residence.
- The Purchased Home Must Be Located in Montgomery County.
HomeAbility
This program is specifically designed to assist home buyers with disabilities. HomeAbility provides a conventional loan with loan-to-value (LTV) ratio of 80% for the first lien and up to 25% in LTV for the second lien that can be used towards a down payment and closing costs. The borrower is not required to get mortgage insurance for this loan. The first lien has an interest rate that is updated daily while the second lien is a no-interest deferred loan that is payable upon the expiration of the first lien.
- One of the borrowers has disabilities or is a guardian for, resides with, and is the principal caregiver for an immediate family member who is disabled.
- Borrower(s) individual income is less than or equal to the Area Median Income Limits.
| Area Median Income Limits for HomeAbility | |
|---|---|
| County Name | 80% AMI |
| Allegany | $57,040 |
| Anne Arundel | $92,880 |
| Baltimore | $92,880 |
| Baltimore City | $92,880 |
| Calvert | $112,400 |
| Caroline | $74,880 |
| Carroll | $92,880 |
| Cecil | $84,320 |
| Dorchester | $74,880 |
| Frederick | $112,400 |
| Garrett | $74,880 |
| Harford | $92,880 |
| Howard | $92,880 |
| Kent | $75,200 |
| Montgomery | $112,400 |
| Prince George's | $112,400 |
| Queen Anne's | $92,880 |
| Somerset | $91,440 |
| St. Mary's | $71,200 |
| Talbot | $80,880 |
| Washington | $62,000 |
| Wicomico | $71,200 |
| Worcester | $71,200 |
Maryland SmartBuy
The last program offered for homebuyers by Maryland DHCD is Maryland SmartBuy that aims to provide mortgage and down payment assistance to eligible homebuyers with student debt. This program provides financing up to 15% of the house price, which can be spent to pay off student loans that may carry a high interest rate. The maximum amount this program can provide is $30,000.
- Household Income Must be Less Than Specified Area Maximum.
- A Borrower Must Have Less Than 20% of House Price in Liquid Assets.
- The Purchased Home Must Be a Primary Residence Located in Maryland.
- A Borrower Must Have an Existing Student Debt With a Minimum Balance of $1,000.
Maryland Municipal Programs
There are a few large cities in Maryland that provide assistance to first time home buyers and homeowners who require assistance. Not all cities in Maryland have municipal programs, but it is always possible to inquire about them by contacting local municipalities. The following section provides an overview of programs available in the largest cities of Maryland.
Baltimore
Baltimore has many incentive programs that allow homebuyers and homeowners to finance their property and stay current on the mortgage payments. These programs are offered by the City of Baltimore Department of Housing and Community Development. They also offer First-Time Homebuyers Incentive Program, which provides a base incentive of $10,000 to eligible first time home buyers. There are a few requirements a household must meet to be eligible for this program.
- Borrower Must Be a First Time Home Buyer.
- Household Income at or Below 80% of the Area Median Income.
- The Purchased Home Must Be a Primary Residence Located in Baltimore.
Federal Programs
There are a variety of national first-time home buyer programs. They also have targeted mortgages insured by different government departments. These include FHA Loans, VA Loans, USDA Home Loans, and loans from the Good Neighbor Next Door Program.
I. Conventional Loans
Conventional loans are classified as conforming loans when they meet the minimum purchase standards and loan amounts set by Fannie Mae and Freddie Mac. Conforming loans typically have lower requirements for credit score, debt-to-income (DTI) ratio, and minimum down payment. They also have competitive fixed-rate, or adjustable-rate mortgages (ARM). Fannie Mae offers a 3% down payment mortgage through the HomeReady program. Freddie Mac offers mortgages with low-interest rates and minimal down payments through their HomePossible program to home buyers without a credit score.
II. FHA Loan
Federal Housing Administration (FHA) loans are mortgages offered by FHA-approved lenders restricted to low to moderate-income earners. While the FHA does not provide loans, all loans issued by these lenders are insured by the FHA. The minimum required down payment is 3.5% and you only require a credit score of 500. You can check your monthly mortgage payment with competitive FHA rates and FHA MIP using our FHA calculator. The FHA home loan program provides mortgage options for first-time home buyers who do not have a large down payment or long credit histories. For more information, visit the FHA Loans page.
III. VA Loan
Veterans Affairs (VA) loans are mortgages that are partially or completely backed by the U.S. Government and usually have lower mortgage rates than other types of loans. These loans are restricted to individuals that fulfill the requirements to receive a VA home loan Certificate of Eligibility (COE) . These loans do not require a minimum down payment unless the home price exceeds its market value, do not have a minimum credit score requirement, and a debt-to-income ratio of less than 41%. To check your monthly mortgage calculator with a VA funding fee use our VA loan calculator. For more information, visit the VA Loans page.
IV. USDA Home Loan
US Department of Agriculture (USDA) loans are mortgages that are partially or completely backed by the U.S. Government. Its purpose is to provide individuals in rural areas with average or below-average incomes the opportunity to become a homeowner. These mortgages are eligible for any property type but the property must be located in a rural area. You can use our USDA Eligibility Map to determine if you qualify for a USDA loan. They have no credit score requirement but you must have a debt-to-income ratio of less than 41%. For more information, visit the USDA Loans page.