The state of Maryland is making an effort to help potential homebuyers who have student loan debt. They’ve launched two specific programs within its Maryland Mortgage Program (MMP).
You’ve Earned It Program –This Maryland program gives a little bit more help to those first-time buyers who qualify for a MMP loan and also have a minimum of $25,000 in student loan debt (whether it’s in repayment or deferred status).
Recipients will get $5,000 as part of down payment assistance (DPA) deferred loan with 0% interest;
Recipients will receive 0.25% below the regular conventional and government interest rate for MMP 1st
SmartBuy Program — This Maryland program is different since it’s focused on a specific and limited number of eligible properties that have been selected by the Department Real Estate Owned (REO).
There’s not as much flexibility in the selection of a home, but this could be an option for some buyers. So take a look at its current list of homes available for sale.
This program will pay off any outstanding balance on a borrower’s student loan at the time of the home purchase with certain restrictions. You must have a minimum of $1,000 student loan debt and up to a maximum of 15% of the home’s purchase price.
First mortgage will finance up to 95% of the sales price. A second mortgage will be a forgivable loan to pay off the student loan balance. A third mortgage can be in the form of a down payment assistance 0% deferred loan.
You must live in the house for at least 5 years to have your student loan debt forgiven.
There are several government programs that offer loans that are better for borrowers with student loans and on a tighter budget.
Each has different requirements and may not be a good option for you. However, one may make your homeownership dreams comes true.
Fannie Mae HomeReady Mortgage — allows up to a 50% DTI and 3% down payment.
VA Loan Guaranty – Buyers who have served in the military can qualify for a loan with 41% DTI. That can be overridden if some of your income tax free.
FHA Loan – Usually allows a 43% DTI but will sometime allow a higher DTI on case-by-case basis.
I hope this is helpful.
Anytime you or someone you know is thinking about buying or selling a home or has a real estate question, I would love to speak with them. Please either share their contact with me or share my contact with them...whatever they prefer. I always appreciate and have time for your referrals.