Time Home Buyers in Annapolis, Maryland have several sources of
assistance available when purchasing a home. The Federal, State
of Maryland, Anne Arundel County and the local City of Annapolis
governments as well as private organizations administer the programs.
The practicality of using any of the programs to assist you in purchasing
a home depends upon the focus of the program and additional qualification
restrictions established by the organization responsible for administering
In order to review and understand how you might benefit from the
programs, you must first be able to understand the differences in
the way the different organizations define the term "First
Time Home Buyer" as it applies to each program.
The First Time Home Buyer programs benefit
the buyer in three basic areas; obtaining a purchase money mortgage,
assistance with the payment of a down payment and closing costs
and an exemption in the payment of the State Transfer Tax charged
The information about the First Time Home
Buyer programs is organized in the following sections: Maryland
State Transfer Tax Exemption, Purchase Money Mortgages and Down
Payment and Closing Costs Assistance. (1) The Maryland State Transfer
Tax Exemption applies to all First Time Home Buyers purchasing a
home in Maryland, regardless of the County in which they will reside.
(2) The State of Maryland and County administrators organize the
Purchase Money Mortgage Programs and (3) the Down Payment and Closing
Costs Assistance Programs as they can and do differ in availability
and qualification criteria from area to area.
Maryland State Transfer Tax Exemption
The Buyer is exempt from paying .25% of
the Maryland State Transfer Tax (,5% of the sale price) if the Buyer
qualifies as a First Time Home Buyer under the State definition.
As an example of how the exemption is applied,
it is customary in Maryland in the sale of an existing home for
the State Transfer Tax to be split equally between the Buyer and
the Seller. If the purchase money mortgage of the home were $100,000,
the Buyer and Seller would each pay $250.00 at closing. However,
if the Buyer is a First Time Home Buyer under the State definition
then the Buyer is exempt from paying their half of the tax. The
Seller would still pay their half of the tax ($250.00 in this example).
If the contract of sale contains a statement whereby the Buyer agrees
to pay the full .5% (or $500.00 in this example) of the State Transfer
Tax; then, the Buyer will only be exempt from paying half of the
tax as if it were equally split between both parties and the Buyer
WILL have to pay half of the tax (i.e. the other $250.00).
Purchase Money Mortgages
The Maryland Mortgage Program (MMP) provides
low-interest mortgage loans to eligible homebuyers with low- to
moderate-income households through private lending institutions
throughout the State.
Counties may receive an allocation of tax-exempt
mortgage revenue bond authority every year, based on population,
from the Federal government. Some counties choose to transfer their
authority to issue these bonds to the Community Development Administration
(CDA). CDA issues tax exempt mortgage revenue bonds On-Behalf-Of
(commonly referred to as OBO) local jurisdictions through MMP. Applicants
may apply for either OBO funds or Statewide funds (commonly referred
to as Non-OBO Funds), depending on how their needs are met by the
income limits and maximum acquisition costs for each funding type.
Authority to issue Non-OBO funds is received from the Federal government
based upon population. First time homebuyers are required to attend
homeownership counseling. Review this list of HUD
Approved Housing Counseling Agencies in Maryland. The Purchase
Money Mortgage Program Criteria that outlines the eligibility requirements
and Closing Cost Assistance Pgms in Maryland by County
Under some purchase money mortgage programs
where there is a requirement for the Buyer to use their own funds
toward payment of some of the down payment and closing costs, contributions
from non-profit organizations are considered an alternative and
acceptable source of Buyer funds. In this area, the mortgage loan
program most often used as the source of purchase money mortgage
funds is an FHA insured loan. Under HUD a charitable organization
is referenced in the HUD Handbook 4155.1 Rev 4, Section 2-10.
Some of the non-profit organizations require
some form of Seller participation in the non-profit organization's
program of home ownership or counseling and/or also require that
the home purchased meet or exceed specified levels of habitability
before the non-profit organization will gift funds on behalf of
the Buyer. Here are some of the organizations (listed in alphabetical
order) that are active in this area and qualify as a non-profit
organization recognized as tax-exempt under the Internal Revenue
Code Section 501(c)(3).
A Final Thought for You
This is not an all-inclusive list of first
time home buyer programs for purchase money mortgages or for down
payment and closing costs assistance in the State of Maryland. This
section does cover many of the most widely used programs. Baltimore
City and several other local governments may have additional programs
from time to time that are not covered in this section. You are
encouraged to contact the housing and community developement authority
of the local government with jurisdiction over the area in which
you would like to purchase a home. Additionally, it is also a good
idea to contact the authorities overseeing the programs presented
above to ensure that the information provided here is current. The
dynamic nature of the programs require frequent change in order
that the programs remain viable and relevant in satisfying the needs
of the First Time Home Buye as intended.