How to Buy Your First Home in Maryland: Step-by-Step Guide

Maryland is not a simple state to buy your first home in. It has some of the highest closing costs in the country, a colonial-era land law called ground rent that can blindside Baltimore buyers, and county-by-county tax structures that can vary by thousands of dollars depending on which side of a county line a property sits. The upside: Maryland also has some of the most aggressive first-time buyer assistance programs in the country, capable of covering your entire down payment and wiping out student loan debt at the closing table.

This guide walks you through the actual Maryland process in the correct order — from getting pre-approved to sitting at the settlement table.

Step 1: Understand Maryland's Assistance Programs Before You Look at Houses

Most buyers do this backwards. They find a house they love, then scramble to figure out financing. In Maryland, getting your assistance programs lined up first can change what you qualify for, which lender you use, and how much money you need to bring to closing.

The flagship program is the Maryland Mortgage Program (MMP), administered by the Maryland Department of Housing and Community Development (DHCD). The MMP provides 30-year fixed-rate mortgages paired with down payment assistance (DPA) in the form of a 0% interest deferred loan — no monthly payments until you sell, refinance, or pay off the primary mortgage.

DPA options under the MMP's 1st Time Advantage track include:

• A flat $6,000 deferred loan
• 3%, 4%, or 5% of the primary loan amount as a deferred loan
• 6% of the first mortgage for households at or below 50% of Area Median Income (HomeStart product)

If you have outstanding student loan debt, look at Maryland SmartBuy 3.0 before anything else. It pays off up to $25,000 of your student loans at closing as a 0% loan forgiven over five years — the only program of its kind in the country. You'll need a 720 minimum credit score and your entire loan balance paid off at closing (the program covers up to $25,000; you cover any remainder).

Income and purchase price limits vary by county. In Montgomery and Prince George's Counties, the income limit reaches $196,680 for a 1-2 person household. In Anne Arundel, Baltimore City, and Baltimore County, it drops to $136,529 for 1-2 persons.

A HUD-approved homebuyer education course is mandatory for all MMP loans. This is not optional and cannot be completed after you go under contract.

Step 2: Get Pre-Approved with a Maryland-Knowledgeable Lender

Not all lenders understand Maryland's programs. National call-center lenders routinely fail to stack MMP assistance with VA or FHA loans, missing out on strategies that can eliminate your closing costs entirely. Find a DHCD-approved lender — the DHCD website maintains a current list.

At pre-approval, the lender will review:

• Credit scores (minimum 640 for most MMP products; 720 for SmartBuy 3.0)
• Total household income, including all adults over 18 in the home
• Liquid assets (cannot exceed 20% of the purchase price under MMP rules)
• Debt-to-income ratios

Get your pre-approval letter before attending any open houses. In competitive Maryland submarkets — particularly Montgomery County, Howard County, and parts of Prince George's — sellers routinely reject offers without documentation.

Step 3: Work with an Agent Familiar with Your Specific County

Maryland uses two standard purchase contracts, and the choice matters. Montgomery County and D.C.-adjacent areas typically use the GCAAR contract. The rest of the state uses the MAR contract, which since October 2022 functions as a strict as-is sale unless inspection addendums are attached.

These contracts have meaningfully different rules for:

• Who bears risk of loss if the house is damaged before closing
• How inspection contingencies are structured
• The default timeline for inspection periods

An agent who works primarily in Montgomery County may not know the MAR contract well, and vice versa. County-specific experience also matters for local assistance programs — Baltimore City's "Buying Into Baltimore" program requires attending a Live Baltimore Trolley Tour event before signing a contract. Miss that step and you lose the $5,000 grant.

Step 4: Make an Offer — and Protect Your First-Time Buyer Tax Exemption in Writing

Here is where Maryland buyers lose thousands of dollars through ignorance.

Maryland offers first-time buyers a statutory state transfer tax reduction: instead of paying 0.5% of the purchase price, the rate drops to 0.25%, and that reduced rate is legally required to be paid entirely by the seller. On a $400,000 home, this shifts $1,000 from your column to the seller's column.

But this only works if your agent checks the correct box in the purchase contract during negotiation. If the offer is written without asserting the first-time buyer exemption, the attorney cannot fix it at settlement. This is one of the most common and expensive mistakes in Maryland real estate.

For a property to qualify, every grantee on the deed must sign a sworn affidavit confirming first-time buyer status and intent to occupy as primary residence.

Earnest money deposits must be held in an approved escrow account. As of October 2023, Maryland law gives sellers just 10 days to dispute the return of earnest money when a buyer terminates under a valid contingency. After that window closes, the escrow agent must return the funds within 30 days.

Step 5: Order Inspections — Know Maryland's Specific Hazards

Standard inspections cover structure, electrical, HVAC, plumbing, and roof. In Maryland, add these to your due diligence list:

Radon: Portions of Maryland sit on geological formations with elevated radon risk, particularly in the western counties. Radon testing is cheap ($150–$300) relative to mitigation costs later.

Lead paint: If the home was built before 1978 — which describes a large share of Baltimore City and inner-ring suburban housing — Maryland's lead paint law applies. This is significantly stricter than federal law. If you plan to rent any part of the property, the home must be registered with the Maryland Department of the Environment within 30 days of acquisition.

Baltimore ground rent: Before going under contract on any Baltimore City or older Baltimore County rowhouse, search the SDAT Ground Rent Registry to determine if a ground rent encumbrance exists. If it does, and you're using a VA loan, the ground rent typically must be redeemed before closing. The redemption price is calculated by dividing the annual rent by a statutory capitalization rate (6% for most pre-1982 leases, 12% for post-1982 leases).

Chesapeake Bay Critical Area: If the property is within 1,000 feet of tidal water, it falls under the Critical Area Act. Impervious surface (driveway, patio, decking, building footprint) cannot exceed 15% of the total lot. This limit may already be maxed out, restricting your ability to add a driveway, shed, or outdoor structures.

Step 6: Navigate the Settlement Process

Maryland is an attorney-settlement state. Every deed and mortgage must be prepared by or under the direct supervision of a Maryland-licensed attorney. You will work with a title company or settlement attorney for the actual closing.

The standard timeline from ratified contract to settlement is 30 to 45 days, driven primarily by:

• Mortgage underwriting
• Appraisal (ordered by the lender)
• Title search (reviewing deeds, mortgages, plats, liens, and HOA status in county land records)
• Document preparation (ALTA Settlement Statement, deed, deed of trust)

At settlement, you will sign the deed and new mortgage, wire your remaining cash-to-close, and receive keys. The settlement agent records documents in the county land records the same day or next business day.

Step 7: Budget for County-Specific Closing Costs

Maryland's closing costs vary dramatically by county because of locally determined recordation and transfer taxes. Using national average estimates will leave you short at the settlement table.

Key variations:

• Baltimore City: $10.00 per $1,000 recordation tax + 1.5% county transfer tax, but a $22,000 exemption applies to owner-occupied properties
• Montgomery County: Tiered recordation tax ranging from 0.89% to 2.27%, plus a 1.0% county transfer tax — first $100,000 of consideration exempt for owner-occupants
• Prince George's County: 1.4% county transfer tax applied to both the deed AND the mortgage amount — unique in Maryland and particularly punishing for low-down-payment loans
• Calvert County: 1.0% recordation tax, no county transfer tax
• Frederick County: 1.2% recordation tax, no county transfer tax

Budget separately for lender fees (origination, points if applicable), title insurance, the appraisal ($500–$800), and homeowner's insurance for the first year.

If you want a complete breakdown of what the Maryland home buying process looks like at every stage — from MMP applications to settlement day closing cost worksheets — the Maryland First-Time Home Buyer Guide covers the full process with county-specific figures.

Maryland Home Buying Checklist

Use this sequence as a reference:

• Complete HUD-approved homebuyer education course (required for MMP)
• Identify which assistance programs you qualify for (MMP, SmartBuy 3.0, county-level grants)
• Get pre-approved with a DHCD-approved lender
• Confirm agent has experience with your target county and the relevant contract form
• Search SDAT Ground Rent Registry before making an offer on any Baltimore property
• Assert first-time buyer transfer tax exemption explicitly in the purchase contract
• Order radon, lead paint (if pre-1978), and standard home inspections during contingency
• Review Chesapeake Bay Critical Area restrictions for any waterfront or near-water property
• Confirm settlement attorney is Maryland-licensed
• Verify ALTA Settlement Statement figures match loan estimate before signing

The process is manageable once you know where the traps are. Maryland's assistance programs are among the most generous in the country — the buyers who extract the most value from them are the ones who understand the rules before they start shopping.

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