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
National program
BEST FOR: Low down payment, Limited mortgage insurance premiums
WHAT YOU NEED TO KNOW
First-time home buyers can get a conventional home loan with as little as 3% down if the mortgage meets requirements set by Fannie Mae and Freddie Mac. And if you put at least 20% down, you won’t have to pay mortgage insurance. Most lenders require a minimum credit score of 620 to qualify for a conventional mortgage, but a score around 740 earns you the best interest rates.
FHA loans
National program
BEST FOR: Low credit score, Low down payment
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.
VA loans
National program
BEST FOR Military, Low down payment
WHAT YOU NEED TO KNOW
Guaranteed by the U.S. Department of Veterans Affairs, these mortgages are available to military members, veterans and surviving spouses. If you qualify, you’ll see benefits such as no minimum credit score and no down payment or mortgage insurance, but you’ll likely have to pay a VA funding fee.
USDA loans
National program
BEST FOR: Low down payment, 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.
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 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 the property is located in an economically distressed target area.
Highlights
- 30-year mortgages with competitive interest rates.
- Down payment and closing cost assistance, including non-repayable grants.
- Rate discounts and tax credits available to some borrowers.
- Some programs can be combined for added savings.
Eligibility
- Borrower must be a first-time home buyer unless property is in a targeted area.
- Borrower must meet income guidelines, which vary by location and household size.
- Borrower’s liquid assets, including gifts, shouldn’t exceed 20% of the purchase price.
- Property must be the borrower’s primary residence.
- Individual programs may have additional eligibility requirements.
Maryland first-time home buyer loan programs
Maryland Mortgage Premier
State program
BEST FOR: Low mortgage rates, Down payment assistance, Closing cost assistance
WHAT YOU NEED TO KNOW
This mortgage offers competitive interest rates with up to $5,000 for a down payment and closing costs in the form of a no-interest, deferred loan. You don’t have to repay this loan until you sell, refinance or make your final mortgage payment.
Maryland Homefront mortgage
State program
BEST FOR: Military, Low mortgage rates
WHAT YOU NEED TO KNOW
If you’re a veteran or active-duty military member, this 30-year mortgage features a special interest rate discount of 0.25 percentage points.
You’ve Earned It mortgage
State program
BEST FOR: Outstanding student loans, Low mortgage rates, Down payment assistance
WHAT YOU NEED TO KNOW
This loan provides an interest rate discount of 0.25 percentage points, along with $5,000 in down payment assistance. To qualify, you must have at least $25,000 in student loan debt and purchase a home in one of Maryland’s Sustainable Communities. If you qualify for the You’ve Earned It loan and use the Home Credit mortgage credit certificate, state fees may be waived. Read Less
Maryland SmartBuy mortgage
State program
BEST FOR: Outstanding student loans
WHAT YOU NEED TO KNOW
If you’re willing to purchase a home owned by the state of Maryland, this program could eliminate your student debt. To qualify, you must have at least $1,000, but no more than 15% of the home’s purchase price, in student loans. Meet these and other eligibility requirements, and SmartBuy will provide the cash needed to pay off your student loans.
Preferred Rate mortgage
State program
BEST FOR: Low mortgage rates
WHAT YOU NEED TO KNOW
Maryland Preferred Rate loans involve a bit of give and take: Instead of down payment and closing cost assistance, you get the lowest available interest rate on a 30-year home loan. When combined with the DHCD HomeCredit mortgage credit certificate program, this could mean affordable monthly payments for the life of your loan.
4% Grant Assist
State program
BEST FOR: Down payment assistance, Closing cost assistance
WHAT YOU NEED TO KNOW
Borrowers who qualify for this program receive 4% of the mortgage amount to use for a down payment or toward closing costs. Because these funds are provided as a grant, they never have to be repaid. If you choose the 4% Grant Assist, you won’t be able to take advantage of any other down payment assistance or Partner Match programs offered through the DHCD, however.
6% Opportunity Grant
State program
BEST FOR: Down payment assistance, Closing cost assistance, Tax credits
WHAT YOU NEED TO KNOW
You could get a grant for 6% of the total mortgage amount for a down payment and closing costs through this program, but only if you use a Freddie Mac HFA Advantage conventional mortgage. If you qualify for the 6% Opportunity Grant and choose to use the HomeCredit mortgage credit certificate, state fees may be waived.
Partner Match
State program
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 Loan Assist 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.
HomeCredit
State program
BEST FOR: Tax credits
WHAT YOU NEED TO KNOW
The HomeCredit program provides a tax credit equal to 25% of your mortgage interest, up to $2,000 a year. Although the HomeCredit program involves both state and lender fees, it could save you tens of thousands of dollars over the life of the loan.
Summary: 2020 Maryland DHCD first-time home buyer programs
- Maryland Mortgage Premier provides up to $5,000 in assistance.
- Maryland Homefront Mortgage allows a quarter-point interest rate discount to military members.
- You’ve Earned It Mortgage offers a discounted interest rate and $5,000 of assistance to borrowers with $25,000 or more in student loan debt purchasing a home in certain areas.
- The Maryland SmartBuy mortgage will pay off your student debt if you purchase a state-owned home.
- A Preferred Rate mortgage offers a discounted interest rate.
- The 4% Grant Assist provides free money up to 4% of your loan amount.
- The 6% Opportunity Grant gives you assistance totaling 6% of a conventional mortgage.
- Partner Match equals the financial contribution you receive, up to $2,500, from an employer or other organization.
- HomeCredit allows a tax credit against the mortgage interest you pay, up to $2,000 annually.
Now that you’ve been introduced to the first-time home buyer programs Maryland has to offer, it’s time to get better acquainted. 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.
