Buying your first home can be a daunting process, especially when common knowledge dictates you need a 20% down payment. However, this is far from the truth. With all of the available grants and incentives offered at the state, federal and private levels, affording your first home becomes much more feasible. By understanding all of the available incentives and grant options, you will be able to find out what you qualify for and make an educated plan to purchase your first home. With a wide variety of options, it is important to find out which one benefits you the most. To do so, we will go over all of the grants and incentives offered to first-time home buyers in Maryland.
Maryland First-Time Home Buyer Programs
Maryland Mortgage Program
Offered by the Maryland Department of Housing and Community Development, or DHCD, the Maryland Mortgage Program offers first-time home buyers in Maryland competitive loan terms, which can make the difference between being able to purchase and continuing to rent. To qualify, you don’t have to be a first-time buyer but you must not own any real estate when you apply. You also must purchase a home in the state of Maryland, have a household income at or below the local income limit, choose from one of the DHCDs lenders and live in the house once you have bought it.
1st Time Advantage
Specifically for first-time home buyers in Maryland, the 1st Time Advantage program offers competitive interest rates. Within the 1st Time Advantage Program, there are options for down payment assistance, either $5000 or 3% of the purchase price.
The SmartBuy 3.0 program assists first-time home buyers in Maryland with student debt in purchasing a home. SmartBuy financing will give 15% of the home’s purchase price so that the borrower can pay off their outstanding student debts. This program is limited to $30,000, comes with zero interest, and is forgivable over 5 years. To qualify, you must have at least $1000 in student debt, your entire student loan must be paid off by the time you purchase, earn a homeownership counseling certificate, live in the home as your primary residence and contribute at least 5% of the sales price from your funds.
If you or a member of your household is currently living with a disability, you qualify for Maryland’s HomeAbility Program. This program offers two separate loans. The first is one for 80% of the home’s purchase price and another zero-interest loan for up to 25% of the price. HomeAbility comes with no mortgage insurance requirement and lower limits than other loan programs.
Maryland First-Time Home Buyer Loans & Grants
Partner Match allows participating partners to provide financial assistance to borrowers who are eligible and meet the criteria set by the partner. The DHCD matches the funds up to $2,500 as a 0% deferred loan which must be repaid when the home is sold or when the first mortgage ends.
Offered by the Maryland Mortgage Program, the Flex 5000 is a $5000 grant that can be used for a down payment or closing costs. To qualify you will need a credit score of at least 620. All of the flex loans and grants provided by the Maryland Mortgage Program come with zero percent interest and can be repaid once the first mortgage ends.
Flex 4% Grant
The Flex 4% grant is offered through the Maryland Mortgage Program and includes an outright grant of 4% of the total loan amount. This grant is used for down payment or closing costs and does not need to be repaid.
Flex 3% Grant
Similar to the Flex 4% grant but easier to qualify for, the Flex 3% grant is 3% of the total value of the mortgage loan and does not have to be repaid.
Flex 3% Loan
Another form of down payment or closing cost assistance is in the form of a loan, worth 3% of the first mortgage and is structured as a 0% interest deferred on the second lien.
Eligibility for Maryland Mortgage Program Flex Loans and Grants
To be considered eligible for the Maryland Mortgage Programs Flex Loans and Grants you must have completed a homeownership counseling program, not own any other properties at the time of closing, live in the home as your primary residence, have a household income below the Maryland Mortgage Program limit and your mortgage cannot exceed Maryland Mortgage Program limits. The Maryland Mortgage Program is not limited to first-time home buyers in Maryland, however, it is a valuable tool for making your first home purchase a reality.
Federal First-Time Buyer Programs
An FHA Loan is a mortgage backed by the Federal Housing Administration. Their main attraction is their low down payments, starting at only 3.5%, and a requirement for credit scores as low as 580. If you can afford to pay 10% or more down, the credit score range decreases to the 500-579 range. FHA Loans have total home price limits set by the federal government, as well as income limitations. FHA Loans may require private mortgage insurance depending on the amount you are able to pay down.
A USDA Loan is reserved for those wishing to purchase a home in a region that is designated as a rural area. These loans are for low to moderate-income households that require zero down payment, at least a 640 credit score and offer low mortgage insurance rates.
With a Conventional 97 Loan, you can borrow 97% of the home’s cost, resulting in a 3% down payment. Conventional 97’s are a good alternative to FHA loans if you have good credit and want a lower down payment. To qualify for a Conventional 97, you must have a credit score of at least 620, meet income limits, and plan to live in the purchased property as your primary residence.
Reserved for veterans and active service members, a VA loan requires no down payment and a credit score of at least 620. VA loans have some of the best mortgage attributes, with competitively low-interest rates, limited closing costs, and no requirement for private mortgage insurance.
Local and County Based Incentives
Buying Into Baltimore
Buying into Baltimore works like a lottery, providing $5000 for downpayment and closing costs that are forgiven over five years to 20 lucky winners every year. This program has no household income limits.
Baltimore City Employee Homeownership Program
A $5000 loan is offered to full-time, permanent Baltimore City staff to purchase a home. The loan is forgiven over five years.
Reserved for those purchasing a home in the Brooklyn and Curtis Bay neighborhoods in Baltimore. Depending on your household income, you can receive a $10,000 or $20,500 interest-free loan with no monthly payments. You must pay this loan back when your first mortgage ends.
Columbia Down Payment Assistance Program
Provided by Howard County, the Columbia Down Payment Assistance Program offers interest-free loans with no limit where the borrower pays a low rate of 2 points below the primary mortgage interest rate. The loans are due at the end of the first mortgage.
Germantown First-Time Home Buyers
Provided by Montgomery County, Germantown first-time home buyers can borrow 5% of their purchase price up to $10,000 using the Revolving Closing Cost Assistance Program. This comes as a loan with a 5% interest rate that the borrower must pay back in equal installments over ten years with their main mortgage.
Buy Your First Home With Help From Maryland’s Best Mortgage Brokers and Lenders
As you can see there are various incentives and assistance options available to assist in purchasing your first home as a first-time homebuyer in Maryland. With so many choices, it may be difficult to boil down which is best for you. Thankfully, at Federal Hill Mortgage, our team of mortgage professionals is ready to provide you with transparent guidance so that you can get the most out of the incentives and assistance programs. We will be by your side every step of the way so that every aspect of your mortgage is clearly explained and expert advice is given. Get the most out of your first home-buying experience with Federal Hill Mortgage. Call or contact us today to get started.