Down payment assistance can help you buy a home if you’re unable to save enough for a down payment. While there are certain loans on the market that don’t require a down payment, if you’ve never served in the military or have no interest in purchasing a home in a rural area, then a down payment is a necessity. 

So what do down payment assistance programs in Maryland look like? Let’s talk about it.

Who is eligible for down payment assistance programs in Maryland?

It depends on the program. Most programs require the homebuyer to not have owned a home in the past three years or have an income that is at or below the median income. However, each program is different and may have different eligibility requirements.

How much money can you get in Maryland for down payment assistance?

There’s no set amount that the state of Maryland mandates. Some programs offer specific amounts, while others offer a set percentage. Keep in mind that many DPA programs come in the form of loans, so the maximum assistance you can receive may fall to your credit worthiness.

What types of down payment assistance programs are there in Maryland?

DPA programs in Maryland come in a few forms. While we would like to say that all of them are grants, the most common ones come in the form of loans. The good news, though, is that the loans are often forgivable.

Below is.a list of how down payment assistance programs typically appear:

Low Interest Loan

DPA loans can be used to help cover down payment and closing costs. The interest rates are often much lower than the going rates for mortgages. The repayment period, however, is usually much shorter than a traditional mortgage (example, five to ten years). This will increase your monthly payment, 

Forgivable Loan

A forgivable loan is a loan with no monthly payments or interest as long as the terms and conditions of the loan are met. The most common requirement is that the homebuyer live in the purchased home for a set period of time. 

Silent Second Mortgage

A silent second mortgage is a loan with no monthly payments. Payment is only received when the home is sold or there is a transfer of ownership.

Home Equity Sharing

These are less common, but you may find them in your area. With home equity sharing, the homebuyer receives down payment assistance in exchange for a certain amount of equity in the home. When the home is sold, the lender receives a percentage of any profits received. 

Funds Match

Essentially a grant, a funds match program will match the amount the homebuyer saves up for a down payment. 

Soft Second Mortgage

Similar to a forgivable loan, a soft second mortgage is reduced the longer the homebuyer stays in the home. If the homebuyer stays long enough, no payments may ever be needed. 

Grants

Grants do not have to be repaid. DPA grants generally require the homebuyer to live in the home for a set amount of time before they can sell. If the home is sold during this time, repayment is required. While grants are the most coveted of DPA programs, they’re rare. Forgivable loans are more common.  

Where do you find down payment assistance programs in Maryland?

You can find most down payment assistance programs in Maryland on government websites. Just keep in mind that many programs are not listed as down payment assistance and are often referred to as something else, so you may have to be creative with your searches. Unfortunately, each county often calls its program something completely different from its peers.

It’s possible your area may have a program that is dispersed through a local charity or nonprofit instead of through your county government. These programs often aren’t listed online. When they are, you essentially have to know about them before you can find them. If you suspect your county has such programs, consider contacting your county’s housing director.

A word to the wise: if you find a down payment assistance program that looks as if it’s through a predatory lender, it probably is. While many DPA programs do come in the form of loans, many are either soft or forgivable loans. If they do come with interest and monthly payments, all payments should be manageable.  

Does every county have a down payment assistance program?

No. Down payment assistance programs are more commonly found in urban areas or nearby suburbs where the cost to buy a starter home is unusually high. That said, it’s not impossible for a non-urban area to have a program.

If you want to buy in the country, don’t forget that in many rural areas you can use a USDA loan, which doesn’t require a down payment if the home qualifies.  

Final Takeaway

If a down payment assistance program is a part of your home buying strategy, start looking and applying now because it can take time to hear back. For the immediate now, hold off on applying to lenders for pre approval because some programs require homebuyers to work with lenders that have agreed to accept funds from a homeownership program.

If you need help finding programs, we’ve put together an in-depth list of all homeownership programs in the state of Maryland we could find. Should make the process a little easier for you.

Happy house hunting, Hipsters!