Buying a home in Maryland is exciting… until you realize you’re also buying into a whole new
world of acronyms, documents, and people suddenly asking for your “most recent bank
statements” like it’s a casual conversation starter.
The good news? Financing a home purchase doesn’t have to be confusing. If you follow these 8
steps, you’ll know exactly what to do, when to do it, and how to keep your budget (and sanity)
intact.
Let’s do this. 🏡💳
Step 1: Check Your Credit and Clean Up Anything Messy
Before you start house-hunting in Maryland, pull your credit report and see where you stand.
Your credit score impacts:
● Your interest rate
● Your loan options
● How much you’ll qualify for
● Your monthly payment
Quick wins:
✅ Pay down credit card balances
✅ Avoid opening new accounts
✅ Don’t finance a car “real quick” right before applying for a mortgage
✅ Dispute errors on your report
Pro tip: Even a small credit score increase can save you thousands over the life of your loan.
Step 2: Set Your Realistic Home Budget (Not the Bank’s Budget)
Your lender might approve you for a number that makes you feel rich for 12 seconds… and then
you remember you also enjoy food and electricity.
Your home budget should include:
● Mortgage payment (principal + interest)
● Property taxes (Maryland varies by county)
● Homeowners insurance
● HOA fees (if applicable)
● Utilities and maintenance
Rule of thumb: Your payment should feel comfortable with your current lifestyle—not force you
into a “ramen-only financial plan.”
Step 3: Pick Your Down Payment Strategy
In Maryland, you don’t always need 20% down. There are plenty of options depending on your
situation.
Common down payment options:
● 3%–5% down for many conventional loans
● 3.5% down with FHA loans
● 0% down for VA loans (eligible veterans)
● Down payment assistance programs for qualified buyers
Remember: More money down usually means a lower payment, but it also means waiting
longer to save. There’s a balance.
Step 4: Explore Maryland Homebuyer Assistance Programs
Maryland has some great programs that can help with down payment and closing
costs—especially for first-time buyers.
A few examples to explore:
● Maryland Mortgage Program (MMP)
● Down payment assistance loans
● Partner Match programs
● Local county-specific assistance programs
Important note: Each program has eligibility rules like income limits, purchase price limits, and
property requirements.
If you’re not sure what you qualify for, that’s totally normal—this is where a good lender (and a
good real estate pro) makes a big difference.
Step 5: Choose the Right Type of Mortgage Loan
There’s no “one perfect loan” for everyone. The best loan depends on your income, credit, down
payment amount, and long-term plans.
Here’s the quick breakdown:
✅ Conventional Loan
Great for buyers with solid credit and stable income. Often best long-term rates.
✅ FHA Loan
More flexible credit requirements and smaller down payment, but includes mortgage insurance.
✅ VA Loan
Amazing benefits for eligible military buyers—often 0% down and no mortgage insurance.
✅ USDA Loan
For eligible rural areas (yes, parts of Maryland qualify). Often 0% down.
✅ Fixed vs. Adjustable Rate
● Fixed-rate = stable payment
● ARM = lower rate at first, but can change later
Your lender should explain these clearly—if they don’t, get a new lender. Seriously.
Step 6: Get Pre-Approved (Not Just Pre-Qualified)
Let’s talk about a common Maryland homebuyer mistake:
Pre-qualified ≠ pre-approved.
Pre-qualification is a quick estimate.
Pre-approval means the lender actually reviews your finances and says, “Yes, you can buy up
to this amount.”
Why pre-approval matters:
● Sellers take you seriously
● You can move fast when a home hits the market
● It helps you avoid heartbreak (falling in love with a home you can’t afford)
Maryland market tip: In competitive areas like Montgomery County, Howard County, Anne
Arundel, and Baltimore County, pre-approval can be the difference between getting the house or
watching someone else post about it on Instagram.
Step 7: Get Your Documents Ready (Because They WILL Ask)
Mortgage lenders love paperwork the way toddlers love stickers.
Expect to gather:
● Pay stubs (usually last 30 days)
● W-2s or 1099s (past 2 years)
● Tax returns (often past 2 years)
● Bank statements
● Employment verification
● ID and proof of residency
● Debt information
Big warning: Don’t make sudden changes while in the loan process (new credit cards, big
purchases, moving money around). Lenders will notice. They notice everything.
Step 8: Understand Closing Costs and Lock in Your Interest Rate
In Maryland, closing costs can typically range from 2% to 5% of the home’s purchase price,
depending on the loan type, lender fees, title fees, and local taxes.
These may include:
● Appraisal and inspection costs
● Title and escrow fees
● Loan origination fees
● Prepaid property taxes and insurance
● Recording fees and transfer taxes
Rate Lock Tip
Your lender may offer you the ability to “lock” your interest rate for a set period (like 30–60
days). This protects you if rates rise before you close.
You’ll want to ask:
● What’s today’s rate?
● What are the rate lock options?
● Is there a fee?
● How long is the lock?
Final Thoughts: Financing Doesn’t Have to Be Scary
Financing a home purchase in Maryland is really just a step-by-step process—and once you
understand it, you’ll feel way more confident.
And that confidence? That’s how you make smart offers, avoid expensive mistakes, and move
into your new home without feeling like you just ran a financial marathon.
Want Help Making a Smart Plan to Buy in Maryland?
At Mr. Lister Realty, we help buyers understand the process, connect with solid lenders, and
make moves that make financial sense—without the pressure and fluff.
📩 Message us and we’ll help you map out your next step (even if you’re not ready to buy yet).