Maryland SmartBuy 3.0: Buy a Home in Maryland and Pay Off Your Student Debt
Direct Answer
The Maryland SmartBuy 3.0 program pays off up to 15% of your home’s purchase price, capped at $25,000, toward your outstanding student loan balance at closing. This state-backed assistance is structured as a 0% interest loan with no monthly payments, which is fully forgiven after five years of primary home occupancy. To qualify for this specialized transaction under the Maryland Mortgage Program (MMP), buyers must have an eligible student loan balance of at least $1,000, maintain a minimum credit score of 720, and complete an approved homebuyer education course.
Key Takeaways
Up to $25,000 student debt payoff: Pays off up to 15% of your home’s purchase price, capped at $25,000, to clear at least one borrower’s full student loan balance at closing.
Five-year loan forgiveness: Structured as a 0% interest loan with no monthly payment that is fully forgiven after five years, provided you occupy the home as your primary residence.
720 minimum credit score: Requires a 720 minimum credit score and meeting standard MMP guidelines, including household income and purchase price limits.
Combinable down payment assistance: Can be combined with one standard MMP down payment assistance option, if you qualify, either the $6,000 Assistance loan or the 6% Assistance loan.
Subscribe to our blog to receive notifications of posts that interest you!
Student loan debt doesn’t have to keep you out of a home in Maryland. Maryland SmartBuy (3.0) helps you buy a home and pay off your student debt at closing, all in one transaction. It’s part of the Maryland Mortgage Program (MMP) and follows standard MMP guidelines.
What Is the Maryland SmartBuy 3.0 Program?
Maryland SmartBuy 3.0 pays off your outstanding student loan debt in full at closing, then forgives that assistance over five years as long as you stay in the home. You’re not paying down your student loans and saving for a house separately. You do both in a single closing.
How Much Student Debt Does Maryland SmartBuy Pay Off?
Maryland SmartBuy provides up to 15% of your home’s purchase price toward your student debt, up to a maximum of $25,000. If your student debt balance is higher than that limit, you pay the difference out of pocket at closing. The assistance itself is a 0% interest loan with no monthly payment, and it’s fully forgiven after five years as long as you stay in the home.
Am I Eligible for Maryland SmartBuy 3.0?
To qualify for Maryland SmartBuy 3.0, you must:
- Have a minimum student loan balance of $1,000
- Pay off the full remaining student debt balance for at least one borrower at closing (any amount over $25,000 is paid out of pocket)
- Have a minimum credit score of 720
- Be a first-time homebuyer, unless you’re purchasing in a Targeted Area
- Complete an approved Homebuyer Education class
- Meet standard MMP eligibility requirements, including income limits, credit score, and purchase price limits
- Meet all requirements from your lender, mortgage insurer, and any partner organizations providing funding
- Not own any other real property at the time of closing
- Occupy the home as your primary residence
- Work with an approved Maryland SmartBuy lender
Want to know what you can afford before you go further? Get your free rate quote.
Can I Combine Maryland SmartBuy With Down Payment Assistance?
Yes. Maryland SmartBuy can be combined with one standard MMP down payment assistance option, if you qualify:
- $6,000 Assistance: A deferred, 0% interest loan you can put toward your down payment and closing costs.
- 6% Assistance: A deferred, 0% interest loan equal to 6% of your first mortgage, available only if your household income is at or below 50% of the Area Median Income (AMI).
Is Maryland SmartBuy 3.0 Right for You?
Buying a home while carrying student debt can feel out of reach. If you meet the eligibility requirements above, Maryland SmartBuy 3.0 is built to make it possible, and pairing it with $6,000 or 6% Assistance can stretch your buying power further. If you don’t meet SmartBuy’s specific requirements, our guide to first-time homebuyer loan options and programs covers other paths to homeownership with little to no down payment. A DML loan officer who’s an approved Maryland SmartBuy lender can walk through your specific student loan balance, income, and credit profile to see what you qualify for.
How Do I Apply for Maryland SmartBuy 3.0?
- Take Homebuyer Education. Complete an approved class and get your certificate.
- Get pre-approved. Work with an approved Maryland SmartBuy lender to see what you can comfortably afford. Start your pre-approval with DML.
- Find a realtor. A realtor helps you find homes that fit your needs and budget.
- Submit an offer. Your realtor will guide you on a competitive offer and any contingencies.
- Complete the loan application. Your loan officer walks you through inspection, appraisal, and underwriting, and confirms your student debt payoff amount.
- MMP review. Your loan officer submits your file to the Maryland Mortgage Program team to confirm it meets state requirements, then schedules your closing.
- Close. Sign your paperwork, pay off your student debt, and get your keys. You’re a homeowner.
New to the process overall? Our step-by-step guide to buying a house walks through each stage in more detail.
Frequently Asked Questions
What is the maximum amount Maryland SmartBuy will pay toward my student loans?
Up to 15% of your home’s purchase price, capped at $25,000. If your student debt balance is higher, you cover the difference out of pocket at closing.
Do I have to be a first-time homebuyer to qualify?
Not always. You need to be a first-time homebuyer unless you’re purchasing in a Targeted Area, in which case repeat buyers can qualify too.
Can I use Maryland SmartBuy with other down payment assistance?
Yes, you may be able to combine it with one standard MMP option: the $6,000 Assistance loan, or the 6% Assistance loan if your household income is at or below 50% of the Area Median Income.
What credit score do I need for Maryland SmartBuy 3.0?
A minimum credit score of 720.
Does the student debt assistance loan have a monthly payment?
No. It’s a 0% interest loan with no monthly payment, forgiven in full after five years as long as you stay in the home.
What if I don’t have enough saved for a down payment even with SmartBuy?
SmartBuy addresses your student debt, not your down payment directly, though it can be paired with $6,000 or 6% Assistance. If you’re still short, our guide to zero-down FHA financing covers another route to homeownership with little to no money down.
Not Sure If You Qualify?
Down payment assistance programs come with specific income, credit, and purchase price limits set by the state. Talk with a Direct Mortgage Loans loan officer to see whether Maryland SmartBuy 3.0, paired with $6,000 or 6% Assistance, fits your situation.
See also: How to Buy a Home With Student Debt for a broader look at financing options if you’re outside Maryland or don’t meet SmartBuy’s requirements.
*Based on 30 year fixed rate loans. Loans are subject to Eligibility. Eligibility and approval is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, Veteran status and underwriting requirements. Direct Mortgage Loans, LLC NMLS ID# is 832799 (www.nmlsconsumeraccess.org). Direct Mortgage Loans, LLC office is located at 11011 McCormick Rd Suite 400 Hunt Valley, MD 21031. Equal housing lender.
About the Author: Anna Dowling
Was this article helpful?
Your feedback helps us create better content.
About the Author: Anna Dowling
Was this article helpful?
Your feedback helps us create better content.
