In just the first few months of this year, Maryland home prices have risen close to the national average. As a first time home buyer in Maryland, you face this price rush as the first hurdle in finding your new home. Fortunately, the state government offers various financing assistance programs for first-time buyers to help them get through this. Hanfincal will explain what they are and how to qualify for them below.
1. Maryland First-time Homebuyer Loan Programs
1.1. 1st-Time Homebuyer Programs
Before diving into the loans and down payment assistance (DPA) options, we want to recommend 1st-Time Homebuyer Programs — the best housing consultant service for first-time home buyers in Maryland.
Its goal is to find the best financing programs tailored to your specific area and financial situation. Additionally, once it has found your program, it takes full advantage of that program with actionable advice from a team of experts.
Needless to say, for such a competitive housing market not just in Maryland but also across the nation, relying on professional consultants can be a crucial thing. If you’re confused and puzzled by a bunch of these programs, reach out to 1st-Time Homebuyer Programs.
Get a new home in Maryland is very easy with a free consultant here!
1.2. 1st Time Advantage Loans
Maryland Mortgage Program (MMP) offers the 1st Time Advantage Loans with a low 30-year fixed interest rate to first-time home buyers. MMP is run by the Maryland Department of Housing and Community Development to provide subsidized loans for qualified buyers wishing for a home in Maryland.
These loans are divided into six different options to choose from. They are:
- 1st Time Advantage Direct — This loan requires no down payment and usually provides the best interest rates from MMP.
- 1st Time Advantage 6000 — This loan provides $6,000 for a down payment and closing costs. You don’t have to pay for what you receive during the life of your mortgage loan. However, if you refinance, transfer, or sell your property before the mortgage ends, this second loan is repayable.
- HomeStart — This offer is structured as a 30-year zero-interest deferred DPA loan for home buyers with income at 50% AMI or lower.
To be eligible for MMP, you must meet these criteria:
- The borrower must be a first time home buyer who hasn’t owned a home in the past three years.
- The borrower is buying a home, not in a target area and committed to not selling or refinancing the house before closing.
- The borrower is a qualified veteran of the United States.
- For government-insured loans, you must have a FICO credit score of 640.
- For conventional loans, your credit score must fall from 640 to 680.
- You must finish a homebuyer education from MMP.
- These requirements do not apply to qualified veterans of the United States and first-time buyers in some target areas.
1.3. Flex Loans
Flex Loans are also a part of MMP. Therefore, to qualify, you have to meet the MMP eligibility requirements. What you can expect from these loans are:
- Flex Direct — This line requires no DPA, yet with competitive rates for repeat home buyers.
- Flex 5000 — This plan offers you a $5,000 loan that can be utilized for the down payment and closing costs. It works as a 0%-interest 2nd lien. You don’t have to repay until the second lien ends.
- Flex 3% Loan —This loan provides a 3% DPA of the first mortgage. It’s structured as a 0% deferred 2nd lien.
1.4. Maryland SmartBuy 3.0
MMP provides another outstanding program, especially for Maryland home buyers trying to pay off their student debts. It offers up to 15% of the home purchase price, which equals a maximum of $50,000 toward your student debt.
To qualify, you must meet some other requirements below besides the MMP eligibility criteria.
- You currently owe money on student loans with a $1,000 minimum balance.
- The borrower is required to pay off all student loans when purchasing the home.
MMP created HomeAbility to primarily assist disabled homebuyers in Maryland who require financing assistance when buying their new homes. It functions as a conventional loan and offers a first lien lifetime value (LTV) of up to 95%. It also offers up to 25% (or $45,000) toward the down payment and closing costs for a second lien.
Additionally, the second lien bears no interest and is deferred during the tenure of the first lien. Besides this, it is only due upon a refinance, sale, or transfer of a home.
There are requirements to qualify for HomeAbility:
- One of the borrowers is disabled or the guardian, resident, and primary caregiver for a disabled member of their immediate family (age doesn’t matter).
- Borrower income doesn’t exceed the Area Median Income Limits.
1.6. Partner Match
These Partner Match Programs help Maryland first time home buyers with loans, grants, and other types of assistance. In fact, they should be the very first options you should take a look at for an additional DPA going together with a loan product from MMP.
Currently, there are some notable certified partners as follows:
- Community organizations
- Home builders and real estate developers
- Local governments
2. Maryland Down Payment Assistance
Regarding DPA provided by Maryland, we have some options below:
- 1st Time Advantage 3% Loan — This loan serves as a 0%-interest deferred second lien while giving you a DPA of 3% of the first mortgage.
- 1st Time Advantage 4% Loan — This loan serves as a 0%-interest deferred second lien while giving you a DPA of 4% of the first mortgage.
- 1st Time Advantage 5% Loan — This loan serves as a 0%-interest deferred second lien while giving you a DPA of 5% of the first mortgage.
- Flex $5,000 — As earlier introduced, you’re provided with $5,000 for the down payment and closing costs with zero interest and no payment in the first mortgage’s life. Additionally, you can go with this loan while receiving Partner Match funds.
- Flex 3% Loan — This is a DPA second mortgage that serves as a 3% of the first mortgage.
- Flex 3% Grant — Besides loans, you may achieve a grant of 3% for down payment or closing costs. And since it’s a grant, you don’t have to repay it.
3. Government First-time Homebuyer Programs
Apart from the Maryland first time home buyer programs we have listed above, there are nationwide homebuyer programs below. As what it’s called, these programs are backed by the government not only to financially support first-time home buyers. All home buyers should be able to apply for these loans and gain the same benefits from them.
- FHA loans — providing generous requirements on credit scores and debt-to-income. However, if you take this loan, you must pay two different mortgage insurance fees. You pay one upfront and another annually.
- VA loans — These loans are made for active-duty service members and honorably discharged veterans. They, therefore, require no down payment or mortgage insurance. A number for credit score exists for sure, but it’s also shallow.
- USDA loans — These loans target qualified home buyers with low-to-moderate income who plan to buy residents in designated rural areas. Like VA loans, USDA loans require no down payment.
4. Local First-time Home Buyers
4.1. Baltimore First-time Home Buyers
According to a survey conducted by Realtor.com, Baltimore’s median home price saw a 2.2% down from the same time of the previous year. That price was $210,000 in April 2022. Therefore, the down payment options might range from $6,300 (for 3%) to 42,000 for (20%).
Also, if you plan to buy a new home in Baltimore, we recommend looking at this list of state and city DPA programs in the area.
4.2. Columbia First-time Home Buyers
Based on Realtor.com, the median home price in Columbia indicated a 6.3% growth year over year. This figure was $425,000 in April 2022. If you wish to buy a home in this area, your down payment options can fall between ($12,750 for 3%) and $85,000 (for 20%)
Howard County provides the DPA programs in Columbia. Though there’s no precise information about the borrowable amounts — these loans are deferred and become due when the homeowner sells the house, refinances it, or defaults.
Overall, we have compiled a list of all available first-time homebuyer programs. As a first home buyer in Maryland, you might get the best deal this year. Consider mortgage interest rates, DPA availability, and lenders. Hanfincal recommends hiring a 1st-Time Homebuyer Programs deep-dive consultant if you are unsure about where to begin. They will walk you through every process step to ensure you get the most out of your targeted program.