Introduction
The Maryland Mortgage Program provides below-market fixed interest rate mortgage loans and down payment assistance to eligible homebuyers in Maryland. The program aims to help low to moderate income families and individuals purchase homes in the state.
The Maryland Mortgage Program is administered by the Community Development Administration within the Maryland Department of Housing and Community Development. The goals of the program are to:
- Make homeownership more accessible and affordable for creditworthy borrowers who may not qualify for conventional mortgages.
- Promote residential stability and asset building for families and individuals.
- Encourage investment and revitalization in distressed communities through home purchases.
By providing below market rate mortgages, down payment assistance, and homebuyer education, the Maryland Mortgage Program enables more Maryland residents to realize the dream of homeownership. The program has helped tens of thousands of borrowers purchase homes since its inception.
Eligibility Requirements
To qualify for the Maryland Mortgage Program, homebuyers must meet certain eligibility criteria. The key requirements include:
Income Limits
There are income limits based on your household size and the county where you want to purchase a home. For example, in Baltimore County, the maximum household income for a family of 4 is $123,600. Income limits range from around $60,000 to $160,000 depending on location and household size.
Credit Score Minimum
A minimum credit score of 640 is required for the Maryland Mortgage Program. While a higher score is preferable, a 640 FICO score meets the minimum threshold.
First-Time Homebuyer Status
The Maryland Mortgage Program is limited to first-time homebuyers only. This means that none of the borrowers can have owned a home in the past 3 years. There are some exceptions for displaced homemakers or single parents.
Residency Status
At least one borrower must be a Maryland resident. Active military members stationed in Maryland as well as veterans who have lived in Maryland for 12 months also qualify. Non-resident students do not meet the residency requirements.
Meeting each of these key eligibility criteria is essential for qualifying and applying for the Maryland Mortgage Program. Homebuyers should confirm their eligibility before proceeding with the application process.
Down Payment Assistance
The Maryland Mortgage Program offers several options for down payment assistance to help make homeownership affordable. These programs provide grants and loans to assist with covering the down payment and closing costs.
Down Payment Assistance Grants
The Down Payment Assistance Grant provides a grant equal to 5% of the home purchase price, up to $5,000. This grant does not need to be repaid. It is available for eligible homebuyers purchasing a home in Maryland.
To qualify, homebuyers must meet income limits based on the area median income and purchase price limits set by county. First-time homebuyers are given priority.
Down Payment Assistance Loans
The Down Payment Assistance Loan provides a 0% deferred loan equal to 5% the purchase price, up to $5,000. This no-interest loan is not due until the sale, transfer, or refinance of the home.
To qualify, homebuyers must meet the same eligibility requirements as the grant program. First-time homebuyers are given priority.
Repayment for down payment assistance loans is based on the length of time in the home:
- 0-5 years: original loan amount repaid
- 6-9 years: 50% of original loan amount repaid
- 10+ years: original loan amount forgiven
This allows buyers to get into a home without coming up with a large down payment while still encouraging long-term homeownership.
Interest Rates
The interest rates for Maryland Mortgage Program loans are very competitive. Borrowers can choose between fixed and adjustable rate mortgages, depending on their budget and plans.
Fixed Rates
Fixed rate mortgages have interest rates that remain the same for the entire loan term, typically 15 or 30 years. This provides predictability in monthly payments, allowing borrowers to comfortably budget their housing expenses. Current fixed rates for the Maryland Mortgage Program are around [X%].
Adjustable Rates
Adjustable rate mortgages (ARMs) offer lower initial interest rates that can change over time. The interest rate is fixed for an initial period, then adjusts periodically based on market conditions. ARMs allow borrowers to qualify for larger loan amounts, but monthly payments may increase over time. Current adjustable rates start around [Y%].
Discounts
Borrowers may qualify for interest rate discounts through the Maryland Mortgage Program. Discounts are available for:
- First-time homebuyers
- purchasers of energy efficient homes
- buyers who complete homebuyer education courses
- veterans/active military
Rate discounts can reduce initial interest rates by .25% to .50%. Homebuyers are encouraged to inquire about discount programs when applying for a Maryland Mortgage loan.
The competitive interest rates and available discounts make Maryland Mortgage loans affordable for qualifying homebuyers. The program aims to help buyers purchase homes they can comfortably maintain through reasonable monthly payments.
Homebuying Education
The Maryland Mortgage Program requires all homebuyers to complete a homebuyer education course prior to closing on a home loan. These courses cover key topics to help buyers navigate the homebuying process and understand the responsibilities of homeownership.
Required Courses
To meet program requirements, homebuyers must take an MMP-approved 8-hour homebuyer education course. Courses are offered by non-profit housing counseling organizations across the state. When searching for an approved course provider, look for the “MMP Approved” designation.
The required course curriculum covers:
- Budgeting and credit
- Working with real estate professionals
- Shopping for and financing a home
- Home inspections and appraisals
- Loan closing
- Life as a homeowner
Completing the course will provide you with knowledge to confidently navigate your home purchase while fulfilling an MMP requirement.
Course Providers
Approved MMP homebuyer education courses are offered through non-profit housing counseling agencies. Many providers offer in-person classes as well as online options.
Several organizations providing MMP-approved courses statewide include:
- Maryland Department of Housing and Community Development
- St. Ambrose Housing Aid Center
- Housing Authority of Baltimore City
- Anne Arundel County Department of Aging and Disabilities
Check with counseling agencies in your area to find upcoming course dates and availability. Many providers allow you to register for courses on their website.
Costs
The cost for approved 8-hour homebuyer education courses ranges from free up to approximately $99 depending on the provider.
Many non-profit counseling agencies offer courses at no cost or request optional donations. Online courses tend to have a higher fee between $50-$99.
Check with the course provider on their specific fees and policies. Some may offer scholarships or discounted rates if needed.
Scheduling
You must complete the homebuyer course prior to closing on an MMP loan. The course certificate is typically valid for 12 months.
Most in-person courses are held over two weeknights or a single Saturday. Online self-paced courses allow you to work through the material on your own timeline.
Make sure to register for a course date well in advance of your anticipated closing date. Course availability may be limited during peak homebuying seasons.
Completing the required homebuyer education early in the pre-approval process can set you up for success through every step of buying your home.
Mortgage Insurance
Mortgage insurance is required for Maryland Mortgage Program loans when the down payment is less than 20% of the purchase price. This protects the lender in case the borrower defaults on the loan.
There are two main types of mortgage insurance available with the Maryland Mortgage program:
- Private Mortgage Insurance (PMI) – This is insurance from a private mortgage insurer. PMI is typically required when the down payment is less than 20% of the purchase price. The cost is usually between 0.3% – 1% of the loan amount per year. PMI can be canceled once you reach 20% equity either through additional payments or home appreciation.
- Mortgage Insurance Premium (MIP) – This is insurance from the Federal Housing Administration (FHA). MIP is required on all FHA loans such as those offered through the Maryland Mortgage Program. The upfront MIP is 1.75% of the loan amount and is typically rolled into total loan amount. The annual MIP is 0.85% of the loan amount and is paid monthly along with the mortgage payment. MIP lasts for the life of the loan unless the loan is refinanced.
The mortgage insurance costs can add hundreds of dollars per month to your mortgage payment. However, mortgage insurance allows buyers to get into a home with less cash upfront through low down payment programs like the Maryland Mortgage Program. Just be sure to factor the monthly mortgage insurance costs into your home buying budget.
Application Process
To apply for a Maryland Mortgage Program loan, you’ll need to gather some documents and submit a full application. Here’s what to expect during the application process:
Required Documents
You’ll need to provide documents to verify your income, assets, and identity. Required documents usually include:
- Pay stubs for the last 30 days
- W-2 forms for the past 2 years
- Federal tax returns for the past 2 years
- Bank statements for the past 2 months
- Investment account statements
- Driver’s license or other ID
- Social security card
Processing Timeline
Once you submit your full application with all required documents, it usually takes between 30-45 days to get fully approved and close on your mortgage.
Here’s a general timeline:
- Day 1: Submit completed application and documents.
- Day 5: Initial review and verification of application. You may be asked for additional documents.
- Day 10: Loan underwriting. Underwriters analyze your financial info and eligibility.
- Day 25: Appraisal ordered. An appraiser visits the home to determine value.
- Day 30: Final loan approval.
- Day 45: Closing appointment to finalize mortgage and get keys!
Actual timelines vary by lender. A mortgage broker can advise you on realistic timeframes.
Loan Reservations
With the Maryland Mortgage Program, you can reserve funding ahead of formally applying. This reserves your interest rate and downpayment funds.
To reserve funding:
- Get a preapproval letter from a participating lender
- Find a home and execute a purchase agreement
- Apply for a loan reservation with your lender
Reserving your rate early can be beneficial when rates are rising. It also shows sellers you are a serious buyer.
Your loan reservation lasts for 120 days. You must formally apply and finalize the mortgage within that window.
Home Options
The Maryland Mortgage Program offers homebuyers flexibility in choosing the type of home to purchase. Here are some of the options:
New Construction
The mortgage program can be used to finance new construction homes built by developers or custom homes built on privately owned land. To qualify, the home must meet all program guidelines upon completion. Work with a lender to ensure the home will satisfy eligibility requirements when finished.
Existing Homes
Existing homes listed on the open real estate market are eligible for purchase with the Maryland Mortgage Program, subject to meeting location and price limits. This allows buyers to consider resale homes and take advantage of moving-ready properties.
Price Limits
The mortgage program has home price limits based on location that vary from county to county. Some areas have higher price thresholds than others. Review the latest maximum purchase price for your desired area before shopping. Home prices must stay under the limit.
Location Restrictions
The home or land purchased must be located within the state of Maryland. Certain specific metropolitan areas may have geographic boundaries within the state. Check with a lender to confirm the property’s location meets program guidelines. Some rural or exurban areas may be outside eligible purchase areas.
Refinancing
One of the biggest benefits of the Maryland Mortgage Program is the ability to refinance your home loan under favorable terms. The program offers several refinancing options:
Rate/Term Refinancing
Rate/term refinancing allows you to refinance your existing mortgage and lower your interest rate and/or change the length of your loan term. This can help lower your monthly mortgage payments. With a Maryland Mortgage, you can qualify for lower interest rates and fees than are available with conventional loans.
Cash-Out Refinancing
Cash-out refinancing allows you to tap into your home equity by refinancing for more than you currently owe. You can use the extra cash for home improvements, to consolidate debt, or other major expenses. Cash-out refinancing can be risky, so be sure you can afford the higher monthly payments before taking this route.
Streamline Refinancing
Streamline refinancing is an easier, quicker option that lets you refinance your FHA, VA, or USDA loan into a new Maryland Mortgage loan. You typically don’t need an appraisal or to verify income for this type of refinance. Streamline refinancing is ideal if you want to refinance quickly to take advantage of lower rates or switch to the Maryland Mortgage Program.
Refinancing with the Maryland Mortgage Program lets homeowners take advantage of today’s low interest rates and other program benefits. Be sure to discuss all your refinance options with a participating Maryland Mortgage lender.
Additional Resources
Maryland has many resources available to help guide you through the homebuying process and provide assistance with the Maryland Mortgage Program.
Relevant state agencies
- Maryland Housing – The state housing agency offers information on homebuyer assistance programs, foreclosure prevention, rental housing, and more. You can contact a housing counselor for guidance.
- Maryland Department of Housing and Community Development – The DHCD oversees affordable housing programs, community revitalization efforts, and housing rehabilitation loans and grants. Check their site for local assistance.
HUD contacts
- Baltimore HUD office – HUD’s local office provides resources for renters, homebuyers, and homeowners. You can reach out with questions.
- HUD-approved housing counseling agencies – Find a nonprofit HUD counselor for guidance with budgeting, credit, and the homebuying process.
Nonprofit housing counselors
- Maryland Consumer Rights Coalition – A nonprofit with first-time homebuyer classes, foreclosure prevention counseling, and financial literacy.
- St. Ambrose Housing Aid Center – Offering homebuying coaching, financial education, budgeting help, and down payment assistance.
- CANDLE Homebuyer Institute – This Baltimore-based nonprofit can advise on choosing a home and applying for the Maryland Mortgage Program.
FAQs
The state housing agencies and HUD counselors can also answer common questions about qualifying, required documents, interest rates, and more. Don’t hesitate to reach out!
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