The Maryland Mortgage Program is a state-run home loan initiative that offers below-market 30-year fixed-rate first mortgages paired with zero-interest down payment and closing cost assistance for buyers who meet county-specific income, credit, and purchase price limits. It’s administered by the Maryland Department of Housing and Community Development, and you apply through a state-approved lender rather than through the state directly.
Who Qualifies
Most MMP loans are aimed at first-time homebuyers. Under the federal tax rules that govern the mortgage revenue bonds funding the program, “first-time” means you have not held an ownership interest in a principal residence at any point in the three years before your new loan closes.1Office of the Law Revision Counsel. 26 USC 143 – Mortgage Revenue Bonds If you’re married, the same standard applies to your spouse. Owning an investment property or vacation home in the past doesn’t disqualify you, because the test looks only at your principal residence.
Repeat buyers have a path too. The Flex loan line is open to people who currently own or recently owned a home, provided you don’t own any other real property at closing.2Maryland Mortgage Program. MMP Flex Loans Federal law also exempts qualifying veterans and buyers purchasing in designated targeted areas from the three-year rule.1Office of the Law Revision Counsel. 26 USC 143 – Mortgage Revenue Bonds Targeted areas are specific census tracts identified by the state; your lender or the MMP site can tell you whether a given property is in one.
On the credit side, most MMP products require a minimum credit score of 640, and some products set the bar higher. Debt-to-income ratios cap at 50% for conventional loans and 45% for most other loan types. Missing either threshold disqualifies the application regardless of other strengths.
Eligible Properties and Purchase Price Caps
The home has to be your primary residence. Investment properties and vacation homes are not eligible. Qualifying property types include single-family detached houses, townhouses, and condominiums appearing on the approved lists maintained by FHA, Fannie Mae, or Freddie Mac. New construction also qualifies.
Every Maryland county has its own maximum purchase price, and the caps run higher in high-cost areas such as the Washington, D.C., suburbs. MMP publishes the current limits county by county as a downloadable PDF on its resources page.3Maryland Mortgage Program. Resources for Lenders Check before you make an offer. A property priced even a dollar over the county cap will knock out your application.
Household Income Limits
MMP sets maximum household income limits that vary by county. These are not based on your income alone. The program counts income from every adult who will live in the home, whether or not they’ll be on the mortgage. Your lender provides a Household Income Affidavit that requires a full listing of income sources for every household member. This is where applications commonly fall apart, because an adult child’s salary or a partner’s side income can push the household total over the cap. Current county-by-county figures are published alongside the purchase price caps.3Maryland Mortgage Program. Resources for Lenders The affidavit is a legal document; inaccurate figures can disqualify you.
Loan Products and Down Payment Help
MMP’s loan catalog splits into two main lines depending on whether you’re a first-time or repeat buyer, and each line offers tiers of built-in down payment assistance. The assistance comes as a zero-interest deferred second lien with no monthly payments; the full balance becomes due when the first mortgage ends through payoff, refinance, sale, or transfer of the property.
1st Time Advantage
Reserved for buyers who meet the three-year first-time standard:
- 1st Time Advantage Direct. No built-in assistance, but the lowest interest rate in the lineup. You can pair it with outside help from an employer or local program.
- 1st Time Advantage 6000. A $6,000 zero-interest deferred second loan for down payment and closing costs.
- 1st Time Advantage 3%, 4%, or 5% Loan. A zero-interest deferred second lien equal to 3%, 4%, or 5% of your first mortgage.
- HomeStart. For borrowers at or below 50% of area median income. Comes with a zero-interest, 30-year deferred second loan equal to 6% of the first mortgage.
Flex Loans
Open to both first-time and repeat buyers:
- Flex Direct. No built-in assistance; the most competitive rate in the Flex line.
- Flex 6000. The same $6,000 zero-interest deferred second lien as its 1st Time Advantage counterpart.
- Flex 3% Loan. A zero-interest deferred second lien equal to 3% of the first mortgage.
Partner Match
If you use a 6000 product from either line, you may qualify for an additional $2,500 through Partner Match. The state matches funds contributed by an MMP-approved partner such as a participating employer or local government. The match is structured as a separate no-interest deferred loan due when the first mortgage ends.5Maryland Mortgage Program. Partner Match Down Payment Assistance Stacked with the $6,000 second lien, that’s up to $8,500 toward your upfront costs.
Down payment assistance from MMP is generally not treated as taxable income on your federal return. The IRS has stated that government-funded down payment assistance typically does not count as gross income for the homebuyer.6Internal Revenue Service. Down Payment Assistance Programs – Assistance Generally Not Included in Homebuyers Income
SmartBuy
SmartBuy bundles a home purchase with student loan payoff assistance of up to $50,000. The current version, SmartBuy 3.0, allows a loan-to-value ratio up to 97%. Not every MMP lender participates; you can filter the lender directory for SmartBuy.7Maryland Mortgage Program. Search Lender Directory Terms shift, so confirm current availability with your lender before counting on it.
Homebuyer Education Is Required
Every MMP borrower must complete an approved homebuyer education course before loan approval. The certificate has to be issued within the 12 months before your settlement date.8Maryland Mortgage Program. Homebuyer Education MMP accepts any course approved by HUD, Fannie Mae, or Freddie Mac. Online options include Fannie Mae’s HomeView, Framework, Arch MI, and MGIC. In-person counseling through HUD-approved agencies also counts. This is a hard prerequisite; it cannot be waived or completed after closing, so start it early.
How to Apply
MMP loans originate through state-approved lenders. You can search the lender directory by county, language, or loan type.7Maryland Mortgage Program. Search Lender Directory Not every approved lender offers every product, so confirm your lender handles the specific loan and assistance tier you want.
Before your first meeting, gather:
- Pay stubs covering at least the most recent 30 days.
- Federal tax returns for the past two to three years, depending on your employment type.
- Bank statements from the last two to three months, showing savings and the source of any large deposits.
- Your homebuyer education certificate from a course completed within the past 12 months.
- The Household Income Affidavit your lender provides, filled out with income for every household member.
Once your lender assembles the file, they submit it through MMP’s portal to reserve funds and lock your rate.9Maryland Mortgage Program. Loan Documentation and Manual The state then runs its own compliance review to confirm you, the property, and the loan all meet program rules. That extra layer typically adds several days to the timeline compared with a standard mortgage. At settlement, you sign the primary note along with the documents for any second lien, and both are recorded in local land records. A designated master servicer takes over your monthly payments, escrow, and account management after funding.
After Closing: What to Know for Later
When the Second Lien Comes Due
If you took a 6000 product, a percentage-based product, or HomeStart, the zero-interest second lien sits on your title with no monthly payment. The full balance becomes due when your first mortgage ends by payoff, refinance, sale, or transfer.4Maryland Mortgage Program. MMP 1st Time Advantage Plan for that when you’re figuring net proceeds on a future sale.
Refinancing With MMP Assistance in Place
If you want to refinance your first mortgage and keep the MMP second lien, you’ll need subordination, which is the state agreeing to let the new first mortgage take priority over the existing second. MMP has a formal subordination process. Start with your loan servicer early, because approvals take time and the state is not obligated to grant every request.
Federal Recapture Tax
Because MMP loans are funded by tax-exempt mortgage revenue bonds, selling within the first nine years can trigger a federal recapture tax. It applies only if all three of the following are true in the year you sell: you sell within nine years, your income exceeds the adjusted qualifying limit for your family size, and you make a gain on the sale.1Office of the Law Revision Counsel. 26 USC 143 – Mortgage Revenue Bonds Sell at a loss and there’s no recapture. Sales after the ninth year are exempt, as are transfers on death. The tax can never exceed 50% of your gain, and for borrowers whose incomes stay near program limits the actual amount owed is often modest or zero.
Your lender is required to give you a written notice at closing with the income thresholds and holding-period percentages tied to your loan. Keep it. You’ll need it to complete IRS Form 8828 if you sell within the recapture window.10Internal Revenue Service. Instructions for Form 8828 – Recapture of Federal Mortgage Subsidy
A Note on Maryland HomeCredit
Maryland previously issued Mortgage Credit Certificates through the HomeCredit program, which let homeowners claim a federal tax credit equal to 25% of annual mortgage interest, up to $2,000 per year.11Maryland Mortgage Program. Maryland HomeCredit Program Lender Information The program is currently closed to new reservations with no announced reopening date. If you already hold a HomeCredit certificate and are refinancing, an approved lender in the MMP directory may be able to arrange a reissued certificate.