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  • Writer's pictureNathan Zarcaro

Maryland SmartBuy 3.0 - What Home Buyers Need to Know [2023]

Updated: Oct 3, 2023


Prospective Maryland home buyers with student loan debt have a great program and options available to them as they try to jump into the real estate market. The most notable of these programs is Maryland SmartBuy 3.0.


This article will explore:




What is Maryland SmartBuy 3.0?


Maryland's SmartBuy 3.0 program is a state-sponsored mortgage program designed to help prospective homebuyers with student loan debt purchase a home. The program is unique, and it allows Maryland residents to buy a home and clear their student loan debt at the same time.


First introduced in 2016, the program has since allowed Marylanders statewide to become homeowners.


Predominantly used by first-time homebuyers, SmartBuy 3.0 provides borrowers with as much as 15% of the price of the home in order for borrowers to pay off the remainder of their outstanding student loan debt.


The money is effectively a loan at 0% interest, and it is completely forgivable over the course of 5 years.




How does the program work?


SmartBuy 3.0 is designed to allow Maryland residents statewide to gain access to and purchase a home.


In essence, when taking part in the program, you are taking out two loans.


1. The first loan is for 95% of the home purchase price - the guidelines of the program stipulate that you need to come up with at least 5% of the home value for a down payment. The loan that you receive from a SmartBuy approved lender will be a 30-year loan with a fixed interest rate (prevailing market conditions).


2. The second loan is a 5-year forgivable note worth up to 15% of the home's purchase price (or $30,000, whichever is lower). Each year, you will receive forgiveness for 20% of the amount.


The home that you are buying must be a state-owned property in order to take advantage of the program.


In addition to SmartBuy, the state of Maryland also offers a number of state-based student loan forgiveness programs.



Who is eligible for Maryland SmartBuy?


To be eligible for SmartBuy, you still need to be in student loan debt, with an outstanding balance between $1,000 and $30,000. Additionally, you need to meet the following criteria:


  • The remainder of your student loans must be paid off at the time you purchase your home.


  • You need to earn a homeownership counseling certificate prior to close.


  • The home needs to be both your primary residence and you'll need to live there for five years to receive full forgiveness.


  • You need to put a minimum of 5% of the value of the purchase price down from your own money


  • Cannot have owned a home in the previous three years


  • Generally for first-time homebuyers, though this is not a requirement in all cities and towns (Baltimore, for example)


The first-time homebuyer restriction is somewhat flexible, and it can be waived for three main reasons.

  • First, if you're buying a home in a "targeted area," which as of the time of writing are Allegany, Caroline, Dorchester, Garrett, Kent, and Somerset counties, plus Baltimore City


  • Second, if you're a veteran that was discharged honorably.


  • Finally, if you haven't owned a home in the previous three years.



SmartBuy financial criteria eligibility


Of course, beyond those criteria, there are also personal financial criteria that you must meet to take part in the program. Among these are:


  • You need to be at least 18 years old and have a Social Security number

  • A minimum credit score of 720

  • A maximum debt-to-income ratio of 45%

  • Meet specific income levels that can vary by county


By the time you close on the house, you'll also be expected to have completed a homeowner education course.


More: Learn more about closing costs in Maryland



Don't qualify for SmartBuy?


Unfortunately, some Marylanders that want to purchase a home will be ineligible for SmartBuy because they still have too much student loan debt. Remember - the program will forgive a maximum of $30,000 in student loans, so even if you have a 5% down payment saved up for a home in your price range, you won't be able to take advantage of the program until your loan balance is lower.


In this case, you'll want to consider:

  1. Paying down your debt more aggressively

  2. Refinancing your student loans



Refinance your student loans


If MD SmartBuy 3.0 is not an option for you, your next step should be to consider whether any federal or state forgiveness programs may make sense for your financial situation. Keep in mind that private loans are not usually eligible for any federal and state forgiveness programs.


The next thing that you should consider is refinancing your student loan debt, starting with either Splash Financial or LendKey.


Both lenders are actually marketplaces that will quote you a rate in two minutes without impacting your credit score.





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About Nathan Zarcaro

Nathan Zarcaro is the founder of The Student Debt Destroyer and is passionate about personal finance related causes.  A 2018 graduate of Providence College's Liberal Arts Honors Program, Nathan studied Finance, and has worked for industry leaders in both finance and healthcare.  In his free time, Nathan enjoys playing golf and traveling with his wife Brigid.

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