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2022 First-Time Homebuyer Programs in Maryland

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Maryland offers a variety of first-time home buyer programs, which can help qualified borrowers come up with the funds necessary to cover their down payment and closing costs. However, in exchange, many of these programs have specific requirements, such as income limits and minimum occupancy periods. The more you know about each program, the easier it will be to decide if one is the right fit for you. With that in mind, keep reading to learn more about some of the Maryland first-time home buyer programs that are available right now.

Maryland statewide and local first-time homebuyer programs

The Maryland Department of Housing and Community Development manages down payment assistance (DPA) programs on a state level, while local housing authorities manage similar programs for their individual jurisdictions.

Below is a snapshot of a few of the programs that are available throughout the state.

Program nameAssistance amountAssistance typeWhere it’s available
Anne Arundel County Mortgage Assistance ProgramUp to $20,0000% interest loanAnne Arundel County
Settlement Expense Loan Program (SELP)$10,000Forgivable loanBaltimore County
Montgomery County Homeownership Assistance Fund40% of the total qualifying household income, up to $25,000Forgivable loanMontgomery County
City of Frederick’s Community Partners Incentive Program (CPIP)Up to $5,0000% interest loanCity of Frederick

What to know about different types of down payment assistance

Most down payment assistance programs offer money to eligible homebuyers in the form of either a loan or a grant. Often, if the money has to be repaid at all, it will be made available at an affordable interest rate.

However, while the prospect of receiving free money may be enticing, it’s important to note that these programs usually come with quite a few stipulations and qualifying requirements. Before we get into more detail, here is a closer look at how each type of funding tends to work:

  • Second loan: With this type of down payment assistance, a second mortgage lien is secured against your home. Typically, the loan is either forgiven entirely once you’ve lived in the home for a certain amount of time or it becomes due once you decide to sell your home or refinance your mortgage.
  • Grant: If you qualify for grant money, no additional lien will be put on your home and you won’t be obligated to repay the funds. Still, you may be subject to certain requirements, such as needing to live in the home for a certain amount of time.

How Maryland first-time homebuyer programs work

In order to help you sort out how Maryland’s first-time homebuyer programs work, LendingTree researched the program guidelines for a few of the options available through the Department of Housing and Urban Development (HUD) Maryland homeownership assistance page. There are additional programs available through other local governments and nonprofits.

While every program will have its own qualifying requirements, below is a step-by-step guide meant to give you a better idea of what it takes to be approved:

Receive mortgage approval from a participating lender: Each program will likely provide a list of participating lenders. You’ll need to get a mortgage through an approved lender to be considered for assistance. Once you’ve applied for a loan, your lender will help walk you through any additional requirements.

Fulfill any homebuyer education requirements: Some first-time homebuyer programs require that all DPA recipients take a homebuyer education course before they receive their funds. These courses teach you about the basics of homeownership, and typically you’re required to submit a certificate of completion.

Learn about income limits: Down payment assistance is generally meant to help low-to-moderate income individuals become homeowners. You’ll want to check to ensure that you meet any income requirements that a DPA program may have before applying.

Make sure you know how repayment works: Many DPA programs give out grants or forgivable loans, but there may be certain situations in which you must repay the funds. With that in mind, it’s a good idea to make sure that you understand the repayment terms of your DPA program before you accept the money.

Maryland first-time homebuyer program requirements

Before you consider applying to a DPA program, it’s a good idea to ensure you meet the qualifying requirements. Every program is different, and your lender can help you determine if you are a good match.

To get you started, here are the qualifying requirements for the four programs we’ve singled out above:

Program name Credit score minimumDebt-to-income (DTI) ratio maximumMaximum income limitHow long you have to live in home
Anne Arundel County Mortgage Assistance ProgramNo credit score requirements45% back-end ratioMay not exceed 80% of area median incomeNo specified time, but loan is due and payable upon sale or transfer, when the property ceases to become a primary residence, or in 30 years, whichever comes first
Settlement Expense Loan Program (SELP)UnknownHousing and total debt ratios cannot exceed 31% and 43%, respectivelyMay not exceed 80% of the area median income7 years
Montgomery County Homeownership Assistance Fund64050%$105,840-$176,400, depending on size of household10 years
City of Frederick’s Community Partners Initiative Program (CPIP)64050%$154,800-$180,600, depending on size of householdNo time frame, but loan is repayable at time of payoff, refinance, sale or transfer

THINGS YOU SHOULD KNOW

If you’re interested in obtaining assistance with your down payment and closing costs, you should know that many DPA programs set specific income limits as part of their qualifying requirements. You can enter your state and county information into HUD’s median family income lookup tool to learn about the income limits in your area and to make sure that you don’t earn more than your program allows.

National first-time homebuyer programs

Getting approved for a mortgage is one of the most basic requirements that you need to fulfill in order to be approved for a DPA program, including all of the programs we’ve highlighted for Maryland residents.

Typically, first-time homebuyers are good candidates for one of the following loan programs. Although these loans aren’t exclusively available to first-time homebuyers, they are often referred to as the “national first-time homebuyer programs.”

Here is a closer look at each one:

Conventional loans. Fannie Mae HomeReady and Freddie Mac Home Possible are the two conventional first-time homebuyer programs. Unlike the other loans on this list, they aren’t backed by a specific government agency and, as a result, come with more stringent qualifying requirements. However, if you are able to qualify, you’ll likely have access to more favorable loan terms, which can help you save money.

FHA loans. FHA loans are insured by the Federal Housing Administration (FHA), which allows them to accept borrowers with lower credit scores and higher debt-to-income ratios than conventional loans. That said, in exchange, FHA borrowers are expected to pay two separate FHA mortgage insurance fees, one up front and one on an annual basis.

VA loans. Available only to active and former military members, as well as certain military spouses, VA loans are insured by the Department of Veterans Affairs (VA). These loans are known for their flexibility because they typically do not require a down payment, a minimum credit score or mortgage insurance. Still, even if you don’t plan on making a down payment, you can receive assistance with your VA closing costs through a Maryland DPA program.

USDA loans. If you’re a low-to-moderate income homebuyer, you may qualify for a loan that is backed by the U.S. Department of Agriculture (USDA). The USDA offers borrowers favorable loan terms in exchange for purchasing a home in certain designated rural areas. While USDA loans have no down payment requirement, you can still use a Maryland DPA program to help with closing costs.

FAQs about Maryland first-time homebuyer programs

Who qualifies as a first-time homebuyer in Maryland?

In most cases, you’ll be considered a first-time homebuyer as long as you have not owned a home at any point during the past three years. That said, some programs may use different definitions, so it’s a good idea to ask the program administrator for clarification if you have questions regarding your eligibility.

Can I qualify for down payment assistance in Maryland?

Unfortunately, every Maryland down payment assistance program sets its own eligibility criteria, so it’s hard to give a one-size-fits-all answer for who will qualify.

However, as a general rule of thumb, if your income falls within the limits for your area and you’re able to meet the financial requirements, you will likely be a good candidate to receive assistance, provided that funding is still available.

How much of a down payment do I need to buy a house in Maryland?

If you qualify for one of the national first-time homebuyer programs described above, there’s a chance you may not have to make a down payment at all.

Even if your loan program does have a down payment requirement, you may only have to put down between 3% and 3.5% of the home’s purchase price.

Home price trends in Maryland’s major areas

Home prices rose significantly in Maryland over the past year, with some counties experiencing double-digit increases. According to data from the National Association of Realtors (NAR), from the second quarter of 2020 to the second quarter of 2021, home prices in Baltimore County (Baltimore) rose by 8.4% to a median price of $306,594, and prices in Anne Arundel County (Anapolis) rose by 8.4% to $414,784, while prices in Howard County (Columbia) also rose by 8.4% to $538,270.

With those increases, the average monthly mortgage payment in each of those counties rose by $58, $79 and $102, respectively.

 

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