Buying a house in Maryland is an exciting milestone, but the process can take some time. Several factors, like your financial situation, market conditions, and the local economy can affect both how long it takes you to find a home and how much it costs you.
For example, homes in Baltimore are hitting the market at $299,000 and selling within 56 days — 19 days faster than the state average! — so you'll need to move quickly if you want to beat out the competition.
However, homes typically stay on the market longer in Cambridge, so you'll be able to take your time and potentially find a better deal.
The more you know about the steps to buying a house and Maryland's current real estate trends, the more prepared you'll be to navigate this complicated process as quickly and smoothly as possible.
No matter where you are in your home buying journey, Clever's concierge team can connect you with local real estate pros who will help you purchase your Maryland dream home!
The best part? When you buy with a Clever real estate agent, you could earn a cash-back refund worth up to 0.5% of the home price. On a qualifying $300,000 purchase, you'd get $1,500. That's real money back in your pocket!
Step 1: Save for a down payment
Your down payment is the initial portion of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.
Typically, mortgage lenders in Maryland want you to contribute 20% of the purchase price as a down payment. That would be $77,868 for a $389,341 home — the typical home value in Maryland.
However, you have options to lower your down payment amount.
Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).
Minimum Down Payment (%)
Down Payment ($)
Based on typical home values from Zillow (February 2022)
But making a down payment of less than 20% comes with some risks.
First, because you're borrowing more money, you'll have a higher monthly payment and pay more in interest over the life of your loan.
Based on a $389,341 home, the typical home value in Maryland (Zillow, February 2022) with a 2.92% interest rate for a 30-year loan.
Second, you may have to purchase mortgage insurance.
Conventional loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. FHA loans, on the other hand, require a mortgage insurance premium (MIP) for the life of your loans.
Mortgage insurance costs around 1% of your mortgage balance annually. However, rates vary based on your down payment and credit score. Typically, your mortgage insurance payment is added to your mortgage payment each month.
VA loans don't charge mortgage insurance. Instead, you'll pay a VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price.
Maryland down payment assistance programs
Are you looking for help with a down payment in Maryland?
There are thousands of down payment assistance (DPA) programs across the country, including state-specific options for Maryland residents. If you're eligible, you could receive a grant or a second mortgage to help you pay for a home.
Here are some down payment assistance programs in Maryland for you to check out:
Maryland 1st Time Advantage Loan
The Maryland Department of Housing and Community Development offers its 1st Time Advantage Loan program for eligible first-time homebuyers. There are two DPA options within the 1st Time Advantage line to choose from:
The Advantage 5000 program rovides a $5,000 loan to buyers. The loan must be repaid after the first mortgage is paid off.
The Advantage 3% program offers financial assistance equal to 3% of the first mortgage through a 0% deferred second mortgage.
Maryland Mortgage Program Flex
The Maryland Mortgage Program Flex line has more options for repeat homebuyers to choose from, including:
The Flex 5000 program offers participants a second mortgage of $5,000 that's to be paid after the first mortgage is paid off.
The Flex 3% Loan provides assistance equal to 3% of the first mortgage through a 0% deferred second mortgage.
The Flex 3% Grant provides a grant that’s equal to 3% of the first mortgage.
The Flex 4% Grant includes a grant that’s equal to 4% of the first mortgage.
The Partner Match Programs offer assistance through 0% interest loans, forgivable loans, and cash grants.
U.S. Department of Housing and Urban Development
A list of alternative programs in Maryland can be found on HUD’s page here.
Step 2: Get pre-approved for a mortgage
A mortgage pre-approval letter is an offer to lend you up to a certain amount of money to purchase a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home.
Most sellers in Maryland will require pre-approval before showing you their home.
You don't have to decide on one lender right now. In fact, you should compare interest rates and pre-approval amounts from several lenders to make sure you're getting the absolute best terms when you buy your Maryland home.
Get Pre-approved Today!
Get matched with a lender who can tell you how much house you can afford. To get started, where do you plan on buying?
To get a pre-approved for a mortgage, you'll fill out a mortgage application and provide details about your financial situation. They'll look at the following information to determine your mortgage pre-approval amount:
Lenders need to know that you earn enough to make your mortgage payments each month. Most lenders want your monthly housing costs to be less than 28% of your monthly income.
Lenders also consider your other debts, including credit cards, student loans, auto loans, and personal loans. They use this information to calculate your debt to income ratio (DTI) — or your total debt (including future mortgage) divided by your total income.
While some lenders will approve mortgages for buyers with DTI as high as 43%, it's best to keep your DTI under 36%.
Because of this, you might consider paying off some of your other debts before applying for a mortgage in Maryland.
Mortgage lenders in Maryland want to see that you have enough cash in the bank to cover your down payment and closing costs without completely draining your cash reserves.
While this requirement varies by lender, most want you to keep at least enough to cover two mortgage payments including insurance and taxes.
Step 3: Choose the right location
A house's neighborhood can be just as important as its layout and features. In general, you should consider the following factors when deciding which neighborhood is best for you:
What's your home buying budget?
Once you know your budget (a pre-approval letter will tell you the most you can expect to borrow), you can narrow your search to neighborhoods where homes are selling within your price range.
Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years. You want to choose a neighborhood that's in your budget, but could also lead to a big return when you decide to sell.
To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Baltimore:
Home value appreciation in Baltimore
Once you have a list of neighborhoods with homes in your budget, you should evaluate how well each one meets your personal needs and preferences. To finalize your list of target areas, consider factors like:
- School districts
- Your daily commute
- Crime rates
- Restaurants and amenities
- Transportation options
Step 4: Find a great real estate agent in Maryland
Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent should be an expert on buying a home in Maryland.
They'll help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers like title companies and inspectors to help you buy your home in Maryland.
Don't rush into choosing an agent. Instead, take the time to research and interview multiple real estate agents who have experience in the neighborhoods you're interested in. you should pay attention to a realtor's:
- Years of experience
- Number of transactions in the last year (the more the better!)
- Experience in your price range
- Overall review score
- Individual reviews and complaints
Ask each of them questions about your target neighborhoods, how they prefer to communicate, and their strategy for helping you find and close on your new home. You should feel comfortable with the agent's knowledge, experience, and process before committing to an agent.
Top Local Agents Hand-Picked for You!
Clever matches you with multiple agents in your area so you can interview, compare, and choose the best one to help you buy your next home.
Step 5: Start house hunting in Maryland
Searching for homes in Maryland is the fun part of the home buying process! You'll get to look at a variety of homes and discover what you really want in a home.
Prioritize your needs vs. wants when buying a home in Maryland
Make a list of everything you want in a home and prioritize them. At the top of the list should be the items that are most important to you. This will help you separate your "must-haves" from your "nice-to-haves."
Your agent can help you understand if your wants are realistic for your budget and favorite neighborhoods or if you need to rethink what you're looking for.
Look at current housing inventory
The timing of your house hunt in Maryland can have a big impact on your number of options. For example, in Maryland, May has historically seen the most homes for sale. Searching in this season could give you more options and a greater likelihood of finding your dream home.
On the other hand, January gives you the fewest choices in Maryland. Historically, there are 40.5%) fewer homes for sale than during Maryland's peak season.
Housing inventory in Maryland by season
New Listings per Month
Based on January 2022 data from Realtor.com
Step 6: Make an offer
Once you find a Maryland house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.
Currently, in Maryland, homes stay on the market for 58 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.
Historically, Maryland homes sell fastest in April, where the average property is only on the market for 46. If your home search falls around this time, you should be prepared to move quickly and potentially make offers on several homes before yours is accepted.
On the other hand, if you buy in January, you have a bit more time to search. Homes typically stay on the market 19 days longer than Maryland's annual average.
Average time homes spend on market in Maryland
Based on January 2022 data from Realtor.com
What should your offer include?
Your real estate agent can help you decide which of these common options you should include in your offer:
- Seller concessions: You'll have to pay for most of your closing costs out of pocket when you buy a home, but you may be able to ask the seller to cover some of those costs for you. This option may allow you to offer a higher purchase price and essentially include your closing costs in your mortgage.
- Repair credits: If the home is in need of repair, you could ask for credits instead of having the seller make and pay for the repairs. The seller avoids the hassle of waiting for contractors to complete the job, and you get to oversee the repairs in the future to make sure they meet your expectations.
- Inspection contingencies: Most purchase agreements have inspection contingencies that allow you to change your offer (or back out all together) if the inspection turns up major problems. If you have a high degree of certainty about the house's condition (like if the seller can show you a recent inspection report), you can forgo this contingency to give the seller a higher sense of confidence.
- Letter to the seller: Many sellers have a personal attachment to the home. They've lived there for years and want to know the next owner will take care of the property. Writing a letter to the seller can show them how you picture your life in the house and appeal to their sentimental side.
Step 7: Inspections and appraisals
Inspections and appraisals are an opportunity for you to better evaluate the home's condition and value before officially purchasing it. You may have an opportunity after this step to renegotiate the terms of your contract with the seller if something unexpected pops up.
Home inspections in Maryland
Having your Maryland home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it.
Your inspector should check out the following parts of the property:
- Electrical system
- HVAC system
If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.
Sellers in Maryland are required to complete a disclosure form, but this doesn't guarantee that the property is completely safe. To give yourself peace of mind, it's recommended to do more specific tests after a general home inspection and before closing.
Here are a few important inspections for buyers to consider:
Radon testing: Although it's not required by law, Maryland buyers are strongly recommended to test for radon before closing. Some areas in the state are prone to higher radon levels, so homes should be inspected annually. If the seller hasn't conducted a radon test in the past year, you can get a discounted radon test kit from the Maryland Department of the Environment here.
Termite inspection: Some lenders require borrowers to have a pest inspection done before closing. However, even if you're not required to conduct one, it's still a good idea to check for possible infestations before the home is yours.
Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.
Step 8: Close on your new home!
Once you finish your inspections and your lender approves your financing, you'll be ready for closing! Closing is the process of finalizing your mortgage and transferring ownership of the property.
When closing day arrives, you'll meet at the title company to finalize the Maryland buying process. The title company will guide you through the necessary paperwork and help you settle your closing costs.
Make sure to carefully read through each document before signing anything. If you don't understand something or notice an error, ask your escrow agent for clarification.
Most buyers take about an hour to review and sign all of their paperwork, including the following key documents:
- Your final loan application
- The deed
- The mortgage promissory note
- The disclosure statements
After your paperwork is finished, you'll pay your closing costs. If you don't recall how much you owe for the various services you've used during the homebuying process, the title company will take care of the financial details for you. You'll simply pay the total amount you owe to the title company, and they'll distribute the payments to each party on your behalf.
For homebuyers, closing costs can usually be divided into four distinct categories:
- Lender fees: Fees paid to your mortgage lender for preparing your loan. Lender fees may also include other costs related to your loan, such as appraisal fees or survey fees.
- Prepaid costs: Ongoing costs of owning a home. Lenders often require new homeowners to pay for certain expenses up front, such as property taxes, mortgage interest, and homeowners insurance.
- Title and escrow charges: Fees to cover the title company's services. Title and escrow charges can be for facilitating the closing process, performing the title search, and providing title insurance.
- Other closing costs: Miscellaneous expenses that differ for each buyer. A few common costs for buyers can include natural disaster certification fees or real estate attorney fees.
Buyers in Maryland typically pay 3-5% of the purchase price in closing costs. For a $389,300 home — the typical home value in Maryland — that's between $11,679 and $19,465!
Frequently asked questions
- Save for down payment
- Get pre-approved for a mortgage
- Choose your preferred Maryland neighborhoods
- Partner with the right real estate agent in Maryland
- Go house hunting
- Make a strong offer
- Inspections and appraisals
- Do a final walkthrough and close
Yes! The Maryland Mortgage Program 1st Time Advantage offers a 30-year fixed loan to eligible first-time buyers. There are three variations to choose from:
1st Time Advantage Direct. This option has the most competitive interest rates, but doesn't offer any down payment assistance.
1st Time Advantage 5000. This option provides buyers with a $5,000 loan to pay for closing costs or a down payment.
1st Time Advantage 3% loan. This loan can be up to 3% of the homebuyer's first mortgage.
To qualify for any of these programs, your household income must not exceed the limits set for your county.