FHA Loans & Down Payment Assistance in Maryland

Trying to buy a home in Maryland but worried about the down payment? You're not alone. The good news is that FHA loans pair incredibly well with Maryland's down payment assistance programs—and together, they can make homeownership way more affordable than you might think.

FHA loans are backed by the Federal Housing Administration, which means lenders can offer lower down payments and work with buyers who have less-than-perfect credit. When you combine an FHA loan with one of Maryland's assistance programs, you might be able to buy a home with very little money out of pocket.

Whether you're looking at homes in Baltimore, Frederick, Annapolis, or anywhere else across the state, understanding your FHA options is a smart first step toward homeownership.

How FHA Loans Work with Maryland Down Payment Assistance

Here's something many Maryland buyers don't realize: most of the state's down payment assistance programs are specifically designed to work alongside FHA loans. Programs like the Maryland Mortgage Program (MMP) and Partner Match can help cover your down payment and closing costs—sometimes completely.

That 3.5% down payment required for an FHA loan? With the right assistance program, Maryland can help you cover it. Let's look at which FHA loan type might work best for your situation.

FHA 203(b) Loan – Perfect for Maryland First-Time Buyers

This is the standard FHA purchase loan, and it's the most popular option for Maryland homebuyers using down payment assistance.

With a credit score of 580 or higher, you can put down just 3.5%. And here's where it gets interesting for Maryland buyers: if you qualify for programs like the Maryland Mortgage Program, you could receive up to $15,000 in down payment and closing cost assistance. Some buyers across the state have purchased homes with less than $2,000 out of pocket by stacking FHA financing with state assistance.

You will pay FHA mortgage insurance (both upfront and monthly), but when you're getting help with your down payment, that trade-off usually makes sense.

[Learn more about the FHA 203(b) Loan]

FHA 203(k) Loan – Renovate Older Maryland Homes

Maryland has tons of beautiful older homes—especially in Baltimore, Frederick, and historic

neighborhoods throughout the state. Many of these properties need some updating, which is where the 203(k) loan shines.

This program lets you finance both the purchase price and renovation costs in a single mortgage. Found a great house that needs a new roof or kitchen remodel? You can wrap those costs into your loan instead of needing separate financing.

There are two versions: the Limited 203(k) covers up to $35,000 in repairs (great for cosmetic updates), while the Standard 203(k) handles major renovations. Some Maryland down payment assistance programs can even be used alongside a 203(k) loan, though you'll want to check specific program guidelines.

[See how the FHA 203(k) works]

FHA Streamline Refinance – Lower Your Payment

Already own a home in Maryland with an FHA loan? You might be able to reduce your monthly payment through the Streamline Refinance program.

This is one of the easiest refinance options out there. In most cases, you won't need a new appraisal or income verification—just proof that you've been making your payments on time. If interest rates have dropped since you bought your home, you could potentially save hundreds per month.

While this isn't technically related to down payment assistance (since you already own the home), it's worth knowing about if you're currently struggling with your mortgage payment.

[Read about FHA Streamline Refinance]

FHA Reverse Mortgage (HECM) – Options for Maryland Seniors

If you're 62 or older and have significant equity in your Maryland home, a Home Equity Conversion Mortgage (HECM) lets you tap into that equity without selling or making monthly payments.

You can receive funds as a lump sum, monthly payments, or a line of credit. The loan is repaid when you sell the home or no longer live there. It's become a popular retirement income strategy for Maryland seniors, though it's not right for everyone. Make sure to discuss with a financial advisor and your family before proceeding.

[Learn about FHA Reverse Mortgages (HECM)]

FHA Loans for HUD-Owned Homes in Maryland

When FHA-backed homes in Maryland go into foreclosure, they become HUD-owned properties. These are often sold below market value, and HUD sometimes offers special incentives to buyers—including reduced down payments or help with closing costs.

You can use an FHA loan to purchase a HUD home anywhere in Maryland. If the property needs work, you might be able to combine your purchase with a 203(k) renovation loan. This can be an excellent way to get into a home at a lower price point, especially when combined with Maryland's down payment assistance programs.

[Discover FHA REO Purchase Options]

Ready to Explore Your Maryland Down Payment Assistance Options?

The combination of FHA financing and Maryland's assistance programs has helped thousands of residents become homeowners. The key is understanding which programs you qualify for and how to stack them effectively.

Don't assume you can't afford to buy in Maryland until you've explored all your options. Many buyers are surprised to learn they're closer to homeownership than they thought.