First-Time Homebuyer Programs in Maryland

The down payment on a new home is often the biggest hurdle for first-time homebuyers. In Maryland, where the average home value is $420,854, you would need $84,171 to avoid private mortgage insurance.

Fortunately, there are first-time homebuyer programs available in Maryland to help you achieve homeownership, as well as some mortgages, though these usually have income requirements and require mortgage insurance. MoneyGeek explores several state-specific and government-backed first-time homebuyer programs for people from different financial backgrounds.

Maryland offers grants and loans to assist first-time homebuyers in covering down payment and closing costs. We have compiled the first-time homebuyer programs from the Maryland Mortgage Program (MMP) to help you find the best option for your needs and situation.

The 1st Time Advantage program provides access to a variety of loan products with low interest rates and, in some cases, financial assistance to help with down payments and closing costs. It is designed to cater to different financial needs, allowing buyers to choose the loan option that best suits their situation, whether they need direct support or prefer a lower interest rate with no additional assistance. The loan options include:

• 1st Time Advantage Direct: Provides the lowest interest rate available, ideal for buyers who don't require financial assistance for down payments or closing costs.
• 1st Time Advantage 6000: Offers $6,000 in down payment and closing cost assistance, structured as a deferred second lien with no interest loan and no monthly payments. Repayment is only triggered after the first mortgage ends.
• 1st Time Advantage 3% Loan: Grants a deferred loan for 3% of the purchase price to cover down payment and closing costs, with no interest or payments required during the term of the first mortgage.
• 1st Time Advantage 4% Loan: Similar to the 3% option, this loan provides 4% of the purchase price for down payment and closing cost assistance and is structured as a deferred, no-interest loan.
• 1st Time Advantage 5% Loan: Gives 5% of the home’s purchase price in assistance for down payment and closing costs; also structured as a deferred, no-interest loan.

The Maryland Mortgage Program Flex offers a suite of flexible mortgage products designed to accommodate a range of financial needs for both first-time and repeat homebuyers. These loans come with competitive interest rates and options for down payment and closing cost assistance. Borrowers can choose among the following loan options:

• Flex Direct: Provides a low fixed-rate mortgage with no additional assistance, ideal for those who can cover their down payment and closing costs.
• Flex 5000: This option provides a flat $5,000 down payment and closing cost assistance as a deferred second lien with no interest loan and monthly payments. Repayment is only due after the first mortgage ends.
• Flex 3% Loan: Offers 3% of the home’s purchase price as a deferred second lien with no interest, assisting buyers with down payment and closing costs.

The HomeAbility Program offers low-interest, fixed-rate mortgages for Maryland residents with disabilities or borrowers who are purchasing a home for a person with disabilities. It offers conventional loans and up to 95% LTV in a first lien. Additionally, it provides down payment and closing cost assistance of up to 25% of the purchase price, capped at $45,000. This assistance is structured as a no-interest second lien, with repayment deferred until the home is sold or refinanced.

Aside from statewide first-time homebuyer programs in Maryland, city-specific programs are available to help you pursue homeownership in a city of your choosing. Check out the table below for some of the cities in Maryland that provide first-time homebuyer programs for potential residents.

Zero-down-payment loan programs in Maryland allow you to purchase a home without putting money down. USDA and VA loans are two government-backed options that offer no down payment.

USDA loans are designed to help low-to-moderate-income individuals purchase homes in rural areas. The USDA loans are part of the Rural Development Guaranteed Housing Loan program, issued by the U.S. Department of Agriculture. This program aims to improve the quality of life and economic vitality in rural communities by making home ownership more accessible.

USDA loans offer several benefits, including zero down payment options and competitive interest rates. These loans are available for purchasing, building or improving a home. Borrowers must meet certain conditions, such as using the property as their primary residence and ensuring it is located in an eligible rural area. The program is tailored to make home ownership affordable for those who might not qualify for conventional loans.

To qualify for a USDA loan, your property must be 2,000 square feet or smaller and located in a USDA-eligible rural area with a population of less than 35,000. Additionally, there are income limits based on where you live. For example, in Caroline County, MD, the income limit for a four-person, low-income household is $68,150, while in Kenty County, MD, it is $81,700. These criteria ensure that the loans are targeted to those who need them most, helping to foster sustainable rural development.

VA loans, issued by the U.S. Department of Veterans Affairs, are mortgage options for veterans and active-duty service members. These loans help those who have served in the military purchase homes without the burden of a large down payment.

VA loans offer several advantages, including no-down payment requirements, to make homeownership more accessible. Additionally, these loans do not require private mortgage insurance (PMI), reducing monthly costs. VA loans generally have lower interest rates compared to private loans. As of November 2024, the APR for a 15-year fixed-rate VA loan in Maryland is 6.15%, while a 30-year fixed-rate VA loan is 6.23%.

Eligibility for VA loans depends on factors such as length of service, duty status and character of service. Additionally, applicants must meet specific income limits based on their location. A valid Certificate of Eligibility (COE) is also required to apply for a VA loan.

First-time homebuyers in Maryland can take advantage of low-down-payment loan programs that allow them to finance their home with a down payment of 3.5% or less. These programs include conventional, FHA and FHA 203(k) loans.

FHA loans and conventional loans are often compared as they are the two most common types of mortgages. FHA loans require at least a 3.5% down payment, while conventional loans can require as low as 3% for first-time homebuyers. Conventional loans typically have stricter credit score and debt-to-income ratio requirements compared to FHA loans.

As of November 2024, Maryland's current APR for a 15-year fixed-rate conforming loan is 6.00%. In contrast, the current APR for a 15-year fixed-rate FHA loan is 6.88%. APRs on FHA loans can be higher because there tend to be more fees and extra costs associated with borrowing money on government-backed loans.

You can use our FHA vs. conventional loan calculator below to help you compare both FHA and conventional mortgage programs and determine the best option for you.

We have addressed frequently asked questions about first-time homebuyer programs in Maryland to help you explore the best options and move closer to achieving homeownership.

Explore additional MoneyGeek resources for first-time homebuyers in Maryland to help you with the homebuying process.