Maryland First-Time Home Buyer 2021: Programs and Grants

Peter Warden
The Mortgage Reports editor

What to know about buying a house in Maryland

Maryland first-time home buyers face many of the same obstacles as buyers around the nation. High prices and limited inventory can make the process seem daunting.

But count yourself lucky. Because the Old Line State gives you easy access to a ton of support.

You can get counseling and advice as well as home buyer education courses. And, best of all, you might be in line for cash assistance to help cover your down payment and closing costs. Here’s how to get started.

Verify your home buying eligibility in Maryland. Start here (Oct 17th, 2021)

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Maryland home buyer overview

According to Maryland Realtors, the median sales price for homes in the Old Line State was $380,000 in July 2021. That was up from $339,000 a year earlier, which is a 12% increase year over year.

These sorts of rises can be discouraging for those who are saving for a down payment, leaving them feeling as if they’re running uphill.

If you’re in that position, be sure to read on about Maryland’s down payment assistance programs. Because those could help you bridge the gap between your savings account balance and your down payment needs.

Maryland Home Buyer Overview
Average Home Sale Price in Maryland  $380,000
Minimum Down Payment in Maryland (3%) $11,400
20% Down Payment in Maryland $76,000
Average Credit Score in Maryland1 712
Maximum Home Buyer Grant in Maryland2 4% of main mortgage as a nonrepayable grant (Maryland DHCD Flex 4% Grant)

Down payment amounts are based on the state’s most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.

If you’re eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the US Department of Agriculture), you may not need any down payment at all.

Verify your home buying eligibility in Maryland. Start here (Oct 17th, 2021)

First-time home buyer loans in Maryland

If you’re a Maryland first-time home buyer with a 20% down payment, you can get a conventional loan with a low interest rate. And you never have to pay for private mortgage insurance (PMI).

Of course, few first-time buyers have saved enough for 20 percent down. But the good news is, you don’t need that much. Not by a long shot.

Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low-down-payment mortgage programs:

  • Conventional 97 — From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum credit score. You can usually stop paying mortgage insurance after a few years
  • FHA loan — Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance until you refinance to a different type of mortgage, move home, or pay off your loan
  • VA loan — Only for veterans and service members, reservists, and National Guard. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
  • USDA loan — For those on low-to-moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
  • Maryland Mortgage Program — May include competitive interest rates and can be used with down payment assistance. More information below

Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.

These programs even let you use gifted money or a home buyer assistance program to cover the down payment and closing costs.

If you’re not sure which program to choose for your first mortgage loan, your lender can help you find the right match based on your finances and home buying goals.

Find the best first-time home buyer loan for you (Oct 17th, 2021)

Maryland first-time home buyer programs

The Maryland Department of Housing and Community Development (DHCD) offers the Maryland Mortgage Program (MMP), which provides a vast array of mortgage choices to first-time buyers.

The DHCD website explains: “Loan terms are competitive with other home loan products on the market, but what makes MMP unique is the range of associated financial incentives and other assistance that, for many homebuyers, means the difference between being able to purchase and continuing to rent.”

It adds, “MMP down payment assistance can only be obtained with an MMP first mortgage; it is not a stand-alone option. “

So you have to get one of DHCD’s mortgages to obtain down payment assistance. And there are other conditions, too. For most programs you must:

  1. Buy a home in the state of Maryland
  2. Choose one of 80 participating lenders from DHCD’s list
  3. Undergo a home buyer education course in most cases
  4. Have a household income at or below the local income limit
  5. Not own other real estate
  6. Live in the home once you’ve bought it (meaning its a ‘primary residence’)

Those eligibility criteria vary for each mortgage program and you’ll have to drill down on the website for the details of the one you want.

You could also ask a lender on the approved list for help. But don’t commit to a lender at this point. You’ll want to comparison shop later to find your best deal.

Maryland first-time home buyer grants

Maryland DHCD has a number of down payment assistance programs, including:

  • Flex 5000 — A $5,000 no-interest loan with no monthly payments. However, you must repay the original $5,000 when your first mortgage ends. That might be when you sell, refinance, transfer or finish paying down the mortgage
  • Flex 3% Loan — Borrow 3% of your first (main) mortgage on the same terms as the Flex 5000 loan
  • Flex 3% Grant — Receive 3% of your mortgae loan amount in the form of a grant that never needs to be repaid
  • Flex 4% Grant — Another grant that you don’t repay. But this time you get 4% of your main mortgage amount

Clearly, everyone would choose the Flex 4% grant if they could. So expect the eligibility criteria to get tougher as you go down that list.

Another program, called Maryland SmartBuy, can help eligible homebuyers with large amounts of student debt. Its website says:

“To qualify for the Maryland SmartBuy 3.0 program, homebuyers must have an existing student debt with a minimum balance of $1,000. Maryland SmartBuy 3.0 financing provides up to 15% of the home purchase price for the borrower to pay off their outstanding student debt with a maximum payoff amount of $30,000.”

SmartBuy is available through approved lenders and borrowers will have to meet special eligibility criteria.

Also remember that DHCD mortgage assistance programs, including Flex loans, grants, and SmartBuy, are only available if you also use its proprietary Maryland Mortgage Program.

If you’re not using that loan program, look into other local DPA options. There may be help available at the county, city, or local level that works with the type of home loan you’re using. Your loan officer can help you find and apply for programs for which you might be eligible.

Verify your home buying eligibility in Maryland. Start here (Oct 17th, 2021)

Buying a home in Maryland’s major cities

Of the Old Line State’s three most populous cities, only Baltimore saw a rise in home prices during the 12 months prior to July 2021. Those prices held steady in Columbia and drifted lower in Germantown.

Still, saving for a down payment is challenging for nearly every first-time homeowner. So read on for local programs that can help with down payment and sometimes closing cost assistance in each of those cities.

These DPAs are highly likely to require you to use an approved lender and to meet eligibility criteria, just as the statewide programs do.

Baltimore first-time home buyers

The median list price in Baltimore in July 2021 was $225,000, according to Realtor.com. That was up 12.5% year-over-year.

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

  • $6,750 for 3% down payment
  • $45,000 for 20% down payment

The Live Baltimore website lists several state and city down payment assistance programs. The most interesting appear to be those provided by the Maryland DHCD (above). But it’s worth scrolling through the list to see if others might suit you better.

Three stand out:

  1. Buying Into Baltimore — $5,000 as a loan that’s forgiven over five years. So you owe nothing at the end of year five. No household income requirements. But this is a lottery with only 20 winners each year
  2. Baltimore City Employee Homeownership Program — For full-time, permanent city staff only. Get a $5,000 loan that’s forgiven over five years
  3. Baybrook Boost — Open only to those buying in the Brooklyn and Curtis Bay neighborhoods. Get $10,000 or $20,500 depending on your household income. You receive an interest-free loan with no monthly payments. But you have to pay it back when you sell, refinance, transfer or finish paying down your main mortgage

You may find other programs that meet your particular needs if you click that Live Baltimore link.

Columbia first-time home buyers

The median list price in Columbia in July 2021 was $395,000, according to Realtor.com. That held steady year-over-year.

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

  • $11,850 for 3% down payment
  • $79,000 for 20% down payment

Columbia’s down payment assistance programs are provided by Howard County. It doesn’t specify the amounts that can be borrowed. But these are deferred loans that fall due upon sale of the home, refinance or default. These loans are not interest-free; you pay a low rate of 2 points below the primary mortgage interest rate.

Germantown first-time home buyers

The median list price in Germantown in July 2021 was $370,000, according to Realtor.com. That actually fell 4.3% year-over-year.

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

  • $11,100 for 3% down payment
  • $74,000 for 20% down payment

Germantown down payment assistance programs are administered by Montgomery County. You can borrow the most (5% of the purchase price, up to $10,000) using the Revolving Closing Cost Assistance Program (RCCAP). But that comes as a loan with a 5% interest rate that you pay back in equal installments over 10 years in parallel with your main mortgage.

A more attractive alternative may be Option 2 of the MPP program. You can borrow only up to 3% of the purchase price. But this comes in the form of a forgivable loan that expires after five years. So you’ll owe nothing after five years, providing you don’t move, sell, refinance or transfer during that time.

There’s a third program for county employees. You can find more details on that and the two other programs on the website linked above.

Where to find home buying help in Maryland

All the organizations we’ve listed above should provide advice freely to any Maryland first-time home buyer.

In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides a few lists for statewide, regional, and local resources. Here’s the list direct from HUD:

Statewide and regional programs in Maryland

Maryland home buyer programs by city/town

Maryland home buyer programs by county

What are today’s mortgage rates in Maryland?

You can see today’s live mortgage rates in Maryland here.

When you’re ready to start the home buying process, make sure you get personalized rate quotes from at least three mortgage lenders.

Don’t just look at advertised rates online; actually apply for preapproval and compare the interest rates and fees you’re offered. That’s the only way to know you’re getting the best deal possible on your new home loan.

Verify your new rate (Oct 17th, 2021)

1 Source: Experian.com 2021 study of 2020 data

2Based on a review of the state’s available DPA grants at the time this was written