Qualified first time home buyers and other eligible homebuyers can purchase a home using several programs from The Maryland Department of Housing and Community Development (MDHCD) and the Community Development Administration (CDA). Programs include mortgage loans and down payment assistance. These state agencies work together to deliver fixed rate mortgage products with low mortgage rates to individuals and families who want to buy a home in Maryland. Homebuyers will need to qualify for CDA mortgage programs through participating lenders.
As A First Time Home Buyer Use The Maryland Mortgage Program
The CDA offers fixed rate full principal and interest payment loans as well as interest only mortgage loans. CDA offers first mortgage loans for 30 yr, 35 yr, and 40 year lengths. Eligible homebuyers include first time home buyers in all areas of Maryland or second time homebuyers who are purchasing a home in a Targeted Area. Homebuyers must meet certain income limits to be eligible for a CDA Maryland Mortgage Program.
The Maryland CDA offers 2 unique interest only mortgage loans for homebuyers: a 35 year term and a 40 year term. Homebuyers must be first time home buyers be eligible for this program unless the home that is being bought is located in a Targeted Area. Income and purchase price limits apply for all homebuyers depending on where the home being purchased is located. Homebuyers cannot exceed certain net worth or liquid asset requirements as well to be eligible.
All homebuyers using the CDA Maryland Mortgage Program must attend a home buyer education workshop. In some cases, those homebuyers trying to use the Down payment and Settlement Expense Loan Program or a Partner Match program may have to take extra homebuyer counseling and education requirements depending on where they purchasing a home. Some of these jurisdictions which require extra homebuyer counseling include: Anne Arundel County (excluding the City of Annapolis), Baltimore City, Baltimore County, and Harford County.
What Is A Targeted Area In Maryland?
Targeted areas are those areas deemed by HUD and the State of Maryland as areas that are in need of special community and economic development programs. Targeted areas have expanded income and purchase price guidelines to allow a wider range of qualified buyers to purchase homes in these areas.
Does Maryland Have Down Payment and Closing Cost Assistance Programs?
The State of Maryland has several down payment assistance programs available for qualified homebuyers. These programs are focused at serving low to moderate income first time home buyers in any area of Maryland. However, non first time home buyers can use these programs to purchase homes in Targeted Areas.
There are primarily 2 types of down payment assistance programs in Maryland, administered by CDA:
- Downpayment and Settlement Expense Loan Program – DSELP. This program provides a zero interest, no payment, and deferred loans for up to $2,500 for those eligible homebuyers purchasing a home that is $200,000 or less. This loan remains as a second mortgage lien on the home and repayable when the homebuyer pays off the CDA first mortgage by selling their home or by refinancing. Other conditions may apply that require the DSELP to repaid in full. Homebuyers with liquid assets that exceed 10% of the purchase price are not eligible for this loan.
- Another type of downpayment program in Maryland is the 2% grant and the 3% grant. Both of these grants provide either 2 or 3% of the first mortgage loan amount of the home. Neither of these grants have to be repaid. Typically the 3% grant mortgage has a slightly higher mortgage rate than the 2% grant mortgage program.
Additional Loan Programs From The CDA For Maryland Homebuyers
- House Keys 4 Employees – Many states have this type of loan program which provides homebuyers who work for an employer who has elected to offer homeownership programs to its employees. In this program, the employer contributes to the homebuyer’s – the employee’s – pool of money to be used for down payment and closing costs. The CDA matches the employer’s contribution. This program can be used in conjunction with other CDA down payment programs.
- Smart Keys 4 Employees – this program offers an even greater downpayment and closing cost incentive if the employee from a participating employer purchases a home located in a Priority Funding Area and if the home is located within 10 miles of the homebuyer’s place of employment or within the boundaries of the local jurisdiction. This program can also be used in conjunction with other down payment programs offered by the CDA.
- Homeownership For Individuals With Disabilities Program – This program is available throughout the State of Maryland. Eligible homebuyers must have a disability, or have a child who is not over the age of 18 and living in the home with the homebuyer. Homebuyers using this program will have to attend and complete a homeownership counseling program. The mortgage interest rate for this program is extremely competitive with rates between 3-5%. Household income and purchase price limits do apply to homebuyers using this program depending the location of the home being purchased.
To get additional information about down payment assistance programs, or to find out more about mortgage programs please complete the information below:
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