Purchasing a home is one of the biggest financial decisions you will make, and with Maryland being the birthplace of baseball legend Babe Ruth, it’s not unrealistic to want your home loan decision to feel like a grand slam.
Unfortunately, wading through your financing choices often feels more like a strikeout, but it doesn’t have to be that way. An FHA loan in Maryland is one mortgage option people living in “Little America” find appealing for multiple reasons. Keep reading to see why so many people are choosing a Maryland FHA loan, and see if it's the right choice for you.
Why Consider an FHA Loan in Maryland
FHA loans are great in places like Maryland where the median home cost is above the national average. In Maryland, homes cost an average of $67,800 more, which makes down payments hefty. Luckily FHA loans can help as they don’t require a large down payment. As of April 2019, the total value of FHA loans in Maryland was $387 million, making it a popular choice for Maryland residents.
Benefits of FHA Loans MD
• FHA loans are great for first-time homebuyers, especially those who can’t or don’t want to put down a large down payment.
• FHA mortgage rates are typically lower than conventional mortgage rates.
• FHA down payment and credit score requirements are typically lower than conventional loans
• Sellers can contribute up to 6% of the purchase price or appraised value (whichever is less) towards the buyers’ closing costs.
• FHA loans are assumable.
FHA Loan Limits in Maryland
Knowing how much you can borrow is an important thing to know before you begin your house hunting process. The maximum FHA loan limit is adjusted annually and may change depending on where you are planning to live in Maryland. For example, the baseline limit is $420,680, but in Baltimore, the limit is $583,050 due to higher cost of real estate. See the link below to get a full list of Maryland FHA loan limits for 2022.
Are You Eligible for an FHA Loan in MD?
You may be eligible for an FHA loan, if you:
- Have 2 years of steady employment, preferably with the same employer.
- Have had steady income (or increasing income) in the past two years.
- Have had less than two 30-day periods of late payments on your credit report.
- Have declared bankruptcy no less than two years ago and have maintained good credit since.
- Have not been a party in a foreclosure for at least three years and have maintained good credit since.
- Anticipate your mortgage payment will be equal to or less than 30% of your gross income.
Learn More About FHA Loan Requirements
What Do You Need to Apply for an FHA Loan in MD?
Buyers must be able to provide the following information and documents as requested by lenders:
- The addresses of all your residences over the past two years.
- The names of your employers over the past two years.
- W2's for the past two years and current paycheck stubs.
- Your current gross monthly salary.
- Your Social Security Number.
- Names, addresses, and account numbers with balances on all checking and savings accounts.
- Addresses and loan information of any other real estate you owned.
- Self-employed individuals will need to provide personal tax returns for the past two years and a current income statement and balance sheet for the business.
- Students will need to provide evidence of enrollment. If you have student loans, you need to provide verification information.
- United States Department of Housing and Urban Development
- United States Department of Labor
- United States Census Bureau
Note: Facts and figures were sourced from the latest statistics available at the time of this writing.