What You Need to Know About an FHA Loan in MD

Maryland is a great state to live in, with its stunning natural forests, sandy beaches, and proximity to New York City, Washington D.C., Philadelphia, and Wilmington. If you’re thinking about moving to Maryland, or already live in Maryland, and you’re contemplating buying a house for the first time, there are programs for new homeowners that make it easier to purchase your first home. In this article, we’ll discuss FHA loans in Maryland, their advantages, and how to qualify for an FHA loan in Maryland.

 

What Is An FHA Loan?

An FHA loan is a loan from the Federal Housing Administration designed to help families with low-to-moderate incomes attain homeownership. This loan type is popular with those considered first-time homeowners. Congress created the FHA during the Great Depression when the commonly required down payment percentage was 50% with ordinary wage earners couldn’t meet the mortgage terms. Since its creation, the FHA has made it easier for borrowers to receive home loans by reducing the risk to lenders.

 

FHA Loan Advantages

FHA Loans have advantages that attract many first-time homeowners. Not only do they have a lower minimum down payment than conventional loans, as low as 3%, but those with lower credit scores, as low as 580, can qualify. As the potential homeowner pays for private mortgage insurance due to the lower down payment percentage, banks are more willing to loan money to those who need it.

 

How To Qualify For A FHA Loan in Maryland

To be considered a first-time homebuyer in the state of Maryland, individuals can't have owned a home in the past three years. Some exceptions to this definition include qualified veterans and those purchasing homes in a targeted area. A targeted area is a designated area where home ownership is desired, with fewer restrictions for homebuyers.

Counties with all properties in a Targeted Area include:

  • Allegany County

  • Baltimore City

  • Caroline County

  • Dorchester County

  • Garrett county

  • Kent County

  • Somerset County

 

In the counties below, there are some properties that are in targeted areas:

  • Ann Arundel County

  • Baltimore County

  • Frederick County

  • Harford County

  • Montgomery County

  • Prince George’s County

  • Washington County

  • Wicomico County

 

The following counties are non-targeted counties:

  • Calvert County

  • Carroll County

  • Cecil County

  • Charles County

  • Howard County

  • Queen Anne’s County

  • St. Mary’s County

  • Talbot County

  • Worcester County

 

To qualify for an FHA loan in Maryland, the property’s price can’t exceed the limits set by the county, the potential homeowner must have a minimum credit score of 580, a 3.5% down payment, and a debt-to-income ratio of 43% or less. The house they purchase must also be their primary residence, and they must obtain mortgage insurance.

 

Contact Us

At Equity Mortgage, we work with a variety of clients and provide them with alternative options to their current loan programs depending on their mortgage needs. We offer a wide range of mortgage products and have flexible lending practices.

 

If you’re ready to experience a fast, professional, hassle-free mortgage process, don’t hesitate to reach out to us. Contact us today for more information or give us a call at 1-800-332-9221


* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.