Now that the housing market is finally calming down after the pandemic, buyers are facing a new challenge: Soaring mortgage rates.
In Maryland, the average 30-year fixed mortgage rate is 5.54% — up from 2021's historic lows. This raises the average monthly mortgage payment to $1,852 (assuming a 20% down payment at the median home value).
But buying a home in Maryland is still possible, even for first-time home buyers. Many markets are seeing frequent price drops and fewer offers, giving motivated buyers the upper hand in negotiating for the best price.
In this guide, you’ll learn how to buy a house in Maryland with confidence no matter what the market brings. Learn why you can trust our advice.
Whether you're actively house hunting or just starting to browse homes on Zillow, it's never too early to find a great local realtor to guide you on your search. An experienced agent can help you navigate a tricky housing market, explore your financial options, and negotiate the best deal possible.
Best of all, hiring a real estate agent comes at no extra cost to you — since the seller typically pays both their listing agent and your buyer's agent.
Ready to find a great local realtor, but not sure where to start? The best (and easiest!) option is to try a free agent matching service like Clever Real Estate. Answer a few simple questions about your home buying goals, and Clever will match you with hand-picked agents from Keller Williams, RE/MAX, and other top brokerages in your area. Find a top local agent and make your home buying dreams a reality today!
Step 1: Save for a down payment
Your down payment is the first part 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 $81,191 for a $405,957 home — the typical home value in Maryland.
However, you have options to lower your down payment amount.
Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).
Minimum down payment (%)
Down payment ($)
Based on typical home values from Zillow (August 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 home values from Zillow (August 2022) and a 5.54% 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
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: 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 will 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
Step 3: Get preapproved for a mortgage
A mortgage preapproval 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 preapproval before showing you their home.
You don't have to decide on one lender right now. In fact, you should compare interest rates and preapproval amounts from several lenders to make sure you're getting the absolute best terms when you buy your Maryland home.
Step 4: Choose the right location
Currently, the typical home value in Maryland is $405,957, but don't worry if that doesn't perfectly match your budget. Home prices vary dramatically from city to city and even from neighborhood to neighborhood!
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.
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
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.
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, December gives you the fewest choices in Maryland. Historically, there are 47.0% fewer homes for sale than during Maryland's peak season.
Housing inventory in Maryland by season
New listings per month
Based on data from Realtor.com (September 2022)
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 days. 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 data from Realtor.com (September 2022)
» LEARN MORE: What should an offer include?
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!
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 $406,000 home — the typical home value in Maryland — that's between $12,180 and $20,300!
Frequently asked questions
In Maryland it's required for a real estate attorney to be part of every home sale. While your agent can make recommendations, remember you get to make the final decision. Interview lawyers before hiring them to make sure they have the experience you need.
- 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.
Federal Reserve. "Housing Market Tightness During COVID-19: Increased Demand or Reduced Supply?." Accessed October 11, 2022. Updated July 08, 2021.
Consumer Protection Financial Bureau. "The Fed is raising interest rates. What does that mean for borrowers and savers?." Accessed October 11, 2022. Updated March 17, 2022.