Maryland DHCD Programs for First-Time Home Buyers: MMP, SmartBuy, and FHA
Maryland DHCD Programs for First-Time Home Buyers: MMP, SmartBuy, and FHA
Maryland's Department of Housing and Community Development (DHCD) runs what is arguably the most comprehensive state-level homebuyer assistance infrastructure in the country. The centerpiece is the Maryland Mortgage Program (MMP) — but MMP is not a single product. It's a platform of layered programs that can be stacked together, and the combination you assemble determines how much cash you actually need at closing.
Here's what exists, who qualifies, and how the products interact with FHA, VA, and conventional loans.
The Maryland Mortgage Program: What It Actually Is
The MMP provides 30-year fixed-rate first mortgages through DHCD-approved lenders, paired with down payment and closing cost assistance in the form of deferred second liens. The second lien carries 0% interest with no monthly payments. It becomes due only when you sell, refinance, or pay off the primary mortgage.
DHCD splits its products into two tracks:
1st Time Advantage series: Lowest available MMP rates, restricted to buyers who have not owned a home in the past three years.
Flex series: Slightly higher rates, available to repeat buyers or those who need different rate structures.
For most first-time buyers, the 1st Time Advantage products are the right starting point.
Down Payment Assistance Options
Under 1st Time Advantage, DHCD offers:
| DPA Product | Amount | Notes |
|---|---|---|
| 1st Time Advantage $6,000 | Flat $6,000 deferred loan | Straightforward, works for most buyers |
| 1st Time Advantage 3% | 3% of first mortgage amount | Better for higher-priced homes |
| 1st Time Advantage 4% | 4% of first mortgage amount | Most popular option |
| 1st Time Advantage 5% | 5% of first mortgage amount | Maximum DPA without income-based restriction |
| HomeStart 6% | 6% of first mortgage | Only for households at or below 50% AMI |
| 1st Time Advantage Direct | No DPA | Lowest rate; use when you have outside grant funding |
The 1st Time Advantage Direct product is designed for buyers stacking the MMP rate with an external grant (like Baltimore City's Buying Into Baltimore program). It gives you the lowest possible interest rate in exchange for DHCD not providing its own DPA.
Income and Purchase Price Limits (2026)
Every MMP applicant must pass two eligibility screens: household income limits and maximum acquisition cost limits. Both are county-specific.
Household income includes the income of all household members over 18, not just the loan applicants. A $90,000 earner with a non-borrowing spouse who earns $80,000 has household income of $170,000 for MMP purposes.
| County | 1-2 Person Income Limit | 3+ Person Income Limit | Max Acquisition Cost (Non-Targeted) |
|---|---|---|---|
| Montgomery | $196,680 | $229,460 | $1,255,921 |
| Prince George's | $196,680 | $229,460 | $1,255,921 |
| Frederick | $196,680 | $229,460 | $1,255,921 |
| Anne Arundel | $136,529 | $157,008 | $759,315 |
| Baltimore County | $136,529 | $157,008 | $759,315 |
| Howard | $136,529 | $157,008 | $759,315 |
| Baltimore City | $136,529 | $157,008 | $928,051 (Targeted) |
Targeted Areas are census tracts designated for economic revitalization. In Targeted Areas, income limits are relaxed and the three-year first-time buyer requirement is waived entirely. Baltimore City is entirely a Targeted Area under MMP rules.
Maximum total loan amounts are capped at $806,500 regardless of the acquisition cost limits above.
Maryland SmartBuy 3.0: The Student Debt Eliminator
SmartBuy 3.0 is the program that gets the most attention — and the most confusion.
What it does: At closing, SmartBuy pays off your outstanding student loan balance, up to 15% of the home's purchase price with a hard ceiling of $25,000. The payoff amount is structured as a 0% interest unsecured loan that is forgiven at 20% per year over five years, provided you continue living in the home.
The mandatory full-payoff rule: Your entire student loan balance must be eliminated at closing. If you owe $30,000 in student loans, the program covers $25,000 — but you must bring $5,000 in cash to close the gap before the funds will disburse. The program will not pay off a partial balance.
Additional SmartBuy requirements:
- Minimum 640 credit score (many lenders require 720 for the best rates)
- Cannot currently own any residential real estate anywhere
- Must complete HUD-approved homebuyer education
- Must occupy the home as primary residence for five years to receive full forgiveness
SmartBuy can be stacked with standard MMP DPA. A buyer using SmartBuy plus the $6,000 DPA gets both the student loan payoff and $6,000 toward closing costs — all at 0% interest.
The SmartBuy interest rate is set by DHCD and is typically slightly above open-market conventional rates. The math almost always favors SmartBuy for cash-constrained buyers: the up-front capital received far exceeds what a marginally lower interest rate would save over the same period.
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MMP + FHA Loans
The MMP works as a second lien on top of a primary mortgage. That primary mortgage can be:
- An FHA-insured loan
- A VA-guaranteed loan (with ground rent considerations — see below)
- A USDA Rural Development loan
- A conventional Fannie Mae or Freddie Mac loan
FHA loans are particularly common for Maryland buyers using MMP. FHA requires a minimum 3.5% down payment with a 580+ credit score, or 10% down with scores between 500 and 579. The MMP DPA loan can cover some or all of the 3.5% FHA minimum.
For the Baltimore metropolitan area, the 2026 FHA loan limit for a single-family home is $731,400. In the D.C. high-cost area (Montgomery and Prince George's Counties), the FHA limit rises higher in alignment with the conforming loan ceiling for that market.
One practical note on FHA + MMP: FHA loans have a non-negotiable upfront mortgage insurance premium (MIP) of 1.75% of the loan amount, plus annual MIP. FHA MIP does not cancel automatically on loans with down payments below 10% — you'll pay it for the loan's life. If your credit score qualifies for conventional financing with private mortgage insurance (PMI), run the numbers on both before committing to FHA, since conventional PMI cancels at 20% equity.
How to Apply
Complete a HUD-approved homebuyer education course. DHCD maintains a list of approved providers. The National Industry Standards (NIS) framework is also accepted.
Find a DHCD-approved participating lender. Not every lender can originate MMP loans — you must use one from DHCD's approved list. The lender handles the MMP application alongside the primary mortgage.
Have the lender run combined qualification across the primary loan and the DPA second lien.
If applying for SmartBuy, your student loan servicer will need to provide a current payoff statement. The lender coordinates the payoff at closing.
For county-level grants stacked on top of MMP — Prince George's County's $50,000 Pathway to Purchase program, or Baltimore City programs — those applications run in parallel with the MMP process. Each source has its own eligibility screen and timeline, so start all applications simultaneously.
The Maryland First-Time Home Buyer Guide includes a full breakdown of MMP stacking strategies, county program eligibility, and the SmartBuy application workflow in plain language — without the dense compliance language DHCD uses in its official documentation.
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