Fact Sheet: Maryland SmartBuy 3.0

FACT SHEET:

MARYLAND SMARTBUY 3.0 -

AFFORDABLE HOMEOWNERSHIP

FOR BUYERS WITH STUDENT DEBT

For more information, please visit:

mmp.Maryland.gov

Single Family Housing - Community Development Administration

Maryland Department of Housing and Community Development

7800 Harkins Road • Lanham, MD • 20706

UPDATED

10/02/2023

SmartBuy 3.0 enables qualified borrowers with student debt to purchase a program-eligible home in Maryland using conventional

financing through the Maryland Mortgage Program (MMP) administered by the Community Development Administration (CDA). This

product replaces the previous SmartBuy products. The CLTV aligns with regular conventional loans. Effective for loans reserved on or

after 10/02/2023.

PURPOSE

To help manage the housing purchase costs for a borrower who is purchasing an eligible property and has an existing student

debt (which can be in repayment or deferred status) balance of a minimum of $1,000 and up to a maximum of 15% of the

home purchase price (with a cap of $20,000). The full student debt for at least one borrower must be entirely paid off at the

time of the home purchase; partial loan payment is not permitted under this program. (If a co-borrower also has student debt

that can be paid off completely within the 15% maximum, that is permitted.)

TRANSACTION

STRUCTURE

Mortgage Product

Up to 97% of the purchase price will be financed with the first mortgage (30-year conventional

amortizing mortgage loan). The first mortgage will be pooled into a Fannie Mae or Freddie Mac

Mortgage Backed Securities (MBS) structure.

The second loan (which is NOT a mortgage) consists in a 5-year forgivable Promissory Note of up

to 15% of the purchase price, not to exceed a maximum amount of $20,000. This loan will be

used to pay off completely a borrower’s outstanding student debt balance at the time of home

purchase. If there are two borrowers on the loan, only one borrower’s student loan balance

must be paid off. If the full student debt for both borrowers can be paid off, that is permitted,

but partial loan repayment will not be available under this program; either a borrower’s loans

are fully paid off or not at all.

The student debt loan must be in the borrower’s name and for the borrower’s education.

The second loan (not mortgage) is a 0% interest deferred Promissory Note with no monthly

payments, forgivable over 5 years at 20% rate per year on each anniversary date (remainder

due upon sale if the event takes place within the first 5 years from the settlement of the first

mortgage). (If property is sold within the 5-year period, the remainder must be repaid.)

The Promissory Note will not be secured by a lien on the property. It will be funded by the lender

upfront, at loan closing, in the same manner and at the same time with the Down Payment

Assistance (if applicable) as detailed below and then the lender will be reimbursed by CDA.

Down Payment and

Settlement Expense

Assistance

If the borrower desires it, a second mortgage will be provided by CDA as a regular Down

Payment Assistance loan. There are two choices: 1) a $6,000 DPA loan, or 2) a DPA loan equal

to 6% of the first mortgage; this second choice is only available to borrowers earning 50% or less

of AMI. All of these options are 0% deferred loans (due upon sale, payoff, transfer, or refinance

of the first mortgage), subordinate to the first mortgage. The second mortgage will be funded

by lender at closing, in line with the current Down Payment Assistance funding process, and

CDA will reimburse the lender in accordance with the already established Down Payment

Assistance reimbursement process detailed in Directive 2018-16. No Partner Match funds will be

provided by CDA for this program.

Down Payment

Required From Borrower

As required by the insurer, PMI, and/or US Bank. The optional second mortgage may be used

for this.

Private Mortgage

Insurance (PMI)

Approved PMIs can be found on the MMP website at

https://mmp.maryland.gov/Lenders/Pages/Eligible-Mortgage-Insurers.aspx. FNMA loans should

be HFA Preferred; Freddie Mac loans should be HFA Advantage.

Total Program Limit

According to funding; a countdown of funds will be published if limit is neared.

Combined Loan to

Value (CLTV)

In line with the requirements of the investor, PMI and US Bank. Maximum CLTV of 105% (value is

based on home purchase price which is calculated considering the market value and

appraisal, per FNMA’s guidelines.) The second loan (unsecured, so not a mortgage) is not

included in this calculation.

Geographic Limitations

Maryland statewide (see ELIGIBLE PROPERTIES below for additional parameters)

Eligible Borrower

Any creditworthy borrower, based on insurer and servicer underwriting standards as well as

MMP requirements, with student debt of at least $1,000 (see ELIGIBLE BORROWERS section below

for additional parameters including minimum credit score of 720)

Master Servicer

US Bank

FACT SHEET:

MARYLAND SMARTBUY 3.0 -

AFFORDABLE HOMEOWNERSHIP

FOR BUYERS WITH STUDENT DEBT

For more information, please visit:

mmp.Maryland.gov

Single Family Housing - Community Development Administration

Maryland Department of Housing and Community Development

7800 Harkins Road • Lanham, MD • 20706

UPDATED

10/02/2023

PARTNER MATCH

PROGRAM

Not available with this program. Other available assistance from employers, builders, developers, non-profits, etc. may be

utilized by the borrower in combination with this product as long as the CLTV does not exceed the limit, but no match funds are

available from MMP/CDA.

ELIGIBLE PROPERTIES

Any property in the state of Maryland eligible under the Maryland Mortgage Program. Please refer to the Maryland Mortgage

Program Standard 30-Year Purchase Program fact sheet. DHCD REOs cannot be financed under this program.

ELIGIBLE BORROWERS

 Specific requirements for borrowers with existing student loan debt:

 Minimum remaining balance of student loan debt of $1,000 and up to a maximum of 15% of the sales price or

$20,000, whichever is lower. The student loan has to be in the name of the borrower for the borrower’s education. The

loan included in the statement has to be easily identifiable as a student loan and it has to be part of the loan/s listed in

the borrower’s credit report.

 The student loan may be in repayment or deferred status.

 An eligible educational institution is an accredited public, nonprofit, or proprietary (privately owned profit-making)

college, university, vocational school, or other postsecondary educational institution. Also, the institution must be eligible

to participate in a student aid program administered by the U.S. Department of Education. (Most accredited post-

secondary institutions meet this definition.)

 A monthly statement or verification from the student loan lender/servicer (personal loans from private individuals do not

qualify) verifying the amount of the indebtedness must be in the loan file. The lender is the organization that made the

loan initially; the lender could be the borrower's school; a bank, credit union, or other lending institution; or the U.S.

Department of Education. The borrower must be current on the student loan at the time of the SmartBuy loan reservation

and closing.

 The full outstanding balance of the student debt of the borrower (which shall not exceed 15% of the purchase price or

$20,000, whichever is lower) must be paid off as part of closing. This will be reflected on the CD.

• All customary loan underwriting standards and requirements related to student debt apply and will be used to qualify the

homebuyers. Eligible borrowers must qualify for a Maryland Mortgage loan, i.e. credit score, total debt-to-income (DTI) ratio,

income and purchase price limitations, asset limitations, etc. See the Underwriting Requirements section for more

information.

• As with all Maryland Mortgage Program purchase loans, SmartBuy 3.0 requires homebuyers to take a Homebuyer Education

class. See approved options: (http://mmp.maryland.gov/Pages/Homebuyer-Education.aspx).

• For more information on general Maryland Mortgage program requirements, go online to

https://mmp.maryland.gov/Lenders/Documents/FactSheets/MMP-FactSheet-standard-loan-30yrPurchase.pdf, or browse the

website at www.mmp.maryland.gov.

FIRST TIME

HOMEBUYER

REQUIREMENTS

While Maryland Mortgage program loans generally are limited to first-time homebuyers, the requirement is waived if:

• Borrower is purchasing in a targeted area (see http://mmp.maryland.gov/Pages/Targeted-Areas.aspx for more information

on targeted areas); or

• It has been more than three years since the borrower has owned a principal residence; or

• Borrower is an honorably discharged veteran who has not previously used the first-time homebuyer exemption. This is in

accordance with the Heroes Earnings Assistance and Relief Tax Act of 2008, as amended. A DD-214 form must be submitted

to document veteran status, and an Attachment V - Veteran First Time Homebuyer Exemption form (located at

http://mmp.maryland.gov/Lenders/Pages/Loan-Documentation.aspx under First Mortgage Pre-Closing/Documents That Are

Sometimes Required) must be completed.

Regardless of the waiving of the first-time homebuyer requirement, no Maryland Mortgage Borrower can own any other real

property at time of closing.

FACT SHEET:

MARYLAND SMARTBUY 3.0 -

AFFORDABLE HOMEOWNERSHIP

FOR BUYERS WITH STUDENT DEBT

For more information, please visit:

mmp.Maryland.gov

Single Family Housing - Community Development Administration

Maryland Department of Housing and Community Development

7800 Harkins Road • Lanham, MD • 20706

UPDATED

10/02/2023

SPECIAL

REFINANCING

SITUATIONS

If at a future date a borrower refinances the first mortgage loan under this program (with the goal of reducing the interest

rate), the existing Promissory Note may remain in place, forgivable at the same rate for the remainder of the original 5-year

term. CDA or USB must be notified. (It must be paid off if the property is sold.)

The second (DPA) lien must be paid off if the first lien is refinanced outside the Maryland Mortgage Program. If using the MMP

refinance product for the refinance of the first mortgage, the DPA second may be subordinated upon CDA approval.

UNDERWRITING

REQUIREMENTS

All underwriting overlays of US Bank, Fannie Mae, Freddie Mac, and PMIs apply. AUS and manual underwriting allowed.

Minimum middle credit score is 720.

Above and below 80% AMI loans allowed (codes vary). Only borrowers with income at or below 50% AMI are eligible to use

the 6% DPA option.

The master servicer(US Bank), the PMIs and FNMA or Freddie Mac may change their underwriting guidelines from time to time

and those must be met.

All other rules relating to Maryland Mortgage Program loans apply except where specifically noted in this document (see 30-Year Standard Fact

Sheet).

The post-closing documentation must reflect that the student debt balance for the borrower(s) has been brought to zero.

Any overlays required by Fannie Mae, Freddie Mac, PMIs and the master servicer apply, as well as any funding source that provides additional

assistance.

Disclaimer:

The terms and conditions are subject to change until a borrower qualifies for the loan and locks in the interest rate. A borrower should contact an approved

lender for further information concerning a loan and applying for a loan (see "mmp.maryland.gov"). In connection with the Maryland Mortgage program, the

Maryland Department of Housing & Community Development makes no promises, representations or warranties to any party, including any borrower, about the

actual benefit a Maryland Mortgage loan might provide to a specific homeowner. Each borrower’s situation is different, and borrowers should seek the advice

of a financial advisor, attorney or housing counselor before entering into any loan transaction.