What is Maryland SmartBuy?
Short answer: Maryland SmartBuy pays off your student debt in full at closing — up to 15% of the home’s purchase price, capped at $25,000 — as part of buying a home through the Maryland Mortgage Program. The assistance is forgiven over five years, and you make no payments on it.
The current version is SmartBuy 3.0, administered by the Community Development Administration within the Maryland Department of Housing and Community Development.
It is worth being clear about what makes this unusual. Most assistance programs help with the cash you need to buy. SmartBuy attacks the debt that was limiting how much you could borrow in the first place. Removing a student loan payment from your debt-to-income ratio can raise your buying power by considerably more than the $25,000 itself.
SmartBuy solves a specific trap
A lot of Maryland renters are stuck in the same position: good income, decent credit, and a student loan payment large enough that lenders will not approve the mortgage they need. Saving harder does not fix it, because the problem is the monthly obligation, not the down payment.
SmartBuy is designed for exactly that person. The student debt is cleared at settlement, which changes what you qualify for at the moment you buy.
How the student debt payoff works
The SmartBuy assistance is a zero percent interest deferred promissory note of up to 15% of the purchase price, not exceeding $25,000. Three details make it different from ordinary down payment assistance:
- It is not secured by a lien on your property. Unlike MMP down payment assistance, it is an unsecured note.
- It is used exclusively to pay off eligible student debt at closing — it never reaches you as cash.
- It is forgiven at 20% per year on each anniversary, so it disappears entirely after five years in the home.
No monthly payments are due during the five-year term. Your lender funds the note at closing and the state reimburses the lender afterwards.
The payoff must be complete — partial payoff is not permitted
This is the rule that decides eligibility for most people who look at SmartBuy. The entire outstanding balance of at least one borrower’s eligible student debt must be paid off at closing. You cannot use SmartBuy to knock $25,000 off a $60,000 balance.
So the practical test is not “do I have student debt?” It is “can my whole balance be cleared within 15% of the purchase price and the $25,000 cap?” If both borrowers have eligible debt and both balances fit within the limits, both may be paid in full.
What happens if you sell early
If the property is sold before the five-year forgiveness period ends, the remaining unforgiven balance must be repaid on sale. After year five, nothing is owed.
How the forgiveness schedule behaves
Assume the note is $20,000. It forgives at 20% per year — $4,000 on each anniversary. After two years, $8,000 has been forgiven and $12,000 remains. Sell at that point and the $12,000 is repaid from the proceeds. Stay five years and the entire $20,000 is gone.
This is arithmetic illustrating the mechanism, not a quote or an eligibility finding.
Which student debt qualifies?
The requirements are specific, and worth checking before you get attached to the idea:
- Minimum balance of $1,000, with the maximum eligible payoff being 15% of the purchase price or $25,000, whichever is lower.
- It must be the borrower’s own debt, used for the borrower’s own education.
- It must be identifiable as education-related debt and appear on your credit report.
- It may be in repayment or deferred status — being in deferment does not disqualify you.
- You must be current on the student loan at SmartBuy reservation and at closing.
- You must provide documentation — a monthly statement or verification from the loan servicer showing the outstanding balance.
- Personal loans from private individuals are not eligible, however genuinely they funded your education.
Eligible institutions include accredited public, nonprofit or proprietary colleges, universities, vocational schools and other postsecondary institutions eligible to participate in federal student aid programs.
At closing, the full payoff must appear on the Closing Disclosure, and post-closing documentation has to confirm the balance has been reduced to zero.
Find out whether SmartBuy can clear your student debt entirely
The whole balance has to be payable within 15% of the purchase price and the $25,000 cap. It takes one conversation to know whether that works for you.
This is not a commitment to lend. All loans subject to credit approval.
Who qualifies for SmartBuy?
SmartBuy applies every standard Maryland Mortgage Program requirement, plus several of its own. Two of them are stricter than ordinary MMP products.
| Requirement | SmartBuy 3.0 | Standard MMP |
|---|---|---|
| Minimum credit score | 720 | 640 |
| Loan type | Conventional only | FHA, VA, USDA or conventional |
| Maximum debt-to-income | Up to 50% with automated underwriting approval | Varies by loan type and score |
| Lender | SmartBuy-approved lenders only | Any approved MMP lender |
| Underwriting | Automated or manual permitted | Varies by product |
The 720 credit requirement is the detail that most often ends the conversation, so check it first. And because SmartBuy is conventional-only, an FHA borrower cannot use it — which matters if your credit or debt profile pointed you toward FHA.
The rest of the requirements
- First-time homebuyer, generally — meaning no principal residence owned in the previous three years. The requirement can be waived when buying in a designated Targeted Area, or for an honorably discharged veteran using the veteran exemption.
- No other real property owned at closing, even where the first-time requirement is waived.
- Household income within the MMP limits for your county and household size. Loans both above and below 80% of area median income are permitted.
- Purchase price within the county limit.
- Homebuyer education completed before closing through an approved provider.
- The home occupied as your primary residence.
The SmartBuy first mortgage
SmartBuy’s first mortgage is a 30-year conventional amortizing loan financing up to 97% of the purchase price. It is pooled into a Fannie Mae or Freddie Mac mortgage-backed securities structure, and it must satisfy Maryland Mortgage Program requirements as well as the underwriting guidelines of the master servicer, Fannie Mae, Freddie Mac and the approved mortgage insurers.
Because it is conventional financing above 80% loan-to-value, private mortgage insurance applies. Fannie Mae loans use HFA Preferred mortgage insurance products and Freddie Mac loans use HFA Advantage products.
You remain responsible for any minimum down payment contribution the insurer, the private mortgage insurer or the master servicer requires — though available down payment assistance may be used toward it.
You can take down payment assistance too
SmartBuy is not only student debt relief
This is widely missed. Borrowers using SmartBuy 3.0 may also take standard Maryland Mortgage Program down payment assistance alongside the student debt payoff. Two options are available:
- A flat $6,000 assistance loan, or
- An assistance loan equal to 6% of the first mortgage — available only to borrowers earning at or below 50% of area median income.
So the right candidate can have their student debt cleared and receive help with the down payment and closing costs in the same transaction.
These down payment assistance loans behave like ordinary MMP assistance: zero percent deferred second mortgages, due on sale, payoff, transfer or refinance of the first mortgage. Note the contrast — the student debt note is unsecured and forgiven, while the down payment assistance is a secured lien that must be repaid.
Partner Match is not available with SmartBuy. However, borrowers may still combine SmartBuy with other assistance from employers, builders, developers, nonprofit organizations and similar entities, provided all Maryland Mortgage Program, investor and underwriting requirements are met and the maximum combined loan-to-value is not exceeded.
That combined loan-to-value ceiling is 105%, based on the purchase price. Usefully, the unsecured student debt promissory note is not counted in the calculation.
Which properties are eligible?
Any property in Maryland that is eligible under the Maryland Mortgage Program can be financed through SmartBuy 3.0, with one specific exclusion: DHCD real-estate-owned properties are not eligible under this program.
Standard MMP property eligibility rules otherwise apply, so confirm the specific property with your lender before writing an offer.
What happens if you refinance later?
This is handled more thoughtfully than most assistance programs, and the two components behave differently:
- The SmartBuy note may remain in place and continue forgiving on its original five-year schedule if you refinance the first mortgage to reduce your interest rate — provided the administering agency or master servicer is notified. Refinancing for a lower rate does not automatically cost you your remaining forgiveness.
- Any down payment assistance second mortgage must be repaid if the first mortgage is refinanced outside the Maryland Mortgage Program. If the refinance happens through an approved MMP refinance product, subordination of that second may be permitted with agency approval.
And separately: selling during the five years still requires repayment of the unforgiven portion of the SmartBuy note.
When SmartBuy is the right tool — and when it is not
SmartBuy is likely stronger when
- Your entire student loan balance can be cleared within 15% of the purchase price and the $25,000 cap.
- Your student loan payment is what is holding back your approval amount.
- Your credit is 720 or above.
- Conventional financing suits you anyway.
- You expect to stay at least five years, so the note forgives completely.
Ordinary MMP assistance is likely better when
- Your balance is too large to clear entirely. Partial payoff is not permitted, so a large balance rules SmartBuy out regardless of everything else.
- Your credit is below 720. The standard MMP products start at 640.
- You need FHA, VA or USDA financing. SmartBuy is conventional only — and an eligible veteran should compare a straight VA loan, which requires no down payment and carries no monthly mortgage insurance.
- You expect to move within a few years, where you would repay much of the unforgiven note anyway.
- Cash to close, not debt, is your real constraint. A larger down payment assistance option may simply be worth more to you.
Our Maryland down payment assistance guide covers the wider set of statewide and local options, and the Maryland loan programs overview compares the underlying loan types.
How to apply for SmartBuy
- Get your exact student loan payoff balance from your servicer, and check it against 15% of the price range you are shopping in and the $25,000 cap.
- Confirm your credit score is 720 or above.
- Find a SmartBuy-approved lender — a narrower list than MMP lenders generally.
- Get pre-approved, and ask specifically whether you can also take the $6,000 or 6% down payment assistance.
- Complete homebuyer education before closing.
- Stay current on the student loan through reservation and closing.
- Close, with the student debt paid in full and shown on the Closing Disclosure, then supply the post-closing documentation confirming a zero balance.
See what you could buy with your student debt cleared
Pre-approval shows what removing the student loan payment does to your borrowing power, and whether you can take down payment assistance as well.
This is not a commitment to lend. All loans subject to credit approval.
Maryland SmartBuy FAQ
What is Maryland SmartBuy?
A Maryland Mortgage Program option that pays off a homebuyer’s student debt in full at closing — up to 15% of the purchase price, capped at $25,000 — through a zero percent note forgiven over five years.
Can I buy a house in Maryland with student loans?
Yes, and SmartBuy exists specifically for that situation. It clears qualifying student debt at settlement, which removes the monthly payment from your debt-to-income ratio and can substantially increase what you qualify to borrow.
How much student debt will SmartBuy pay off?
Up to 15% of the home’s purchase price, with a maximum of $25,000. The full outstanding balance must be cleared — partial payoff is not permitted.
What if my student loan balance is more than $25,000?
Then SmartBuy generally will not work, because the entire balance has to be paid off at closing. Any amount above the program limit would have to come from you.
Do I have to pay the SmartBuy assistance back?
Not if you stay. The note is forgiven at 20% per year over five years with no monthly payments. If you sell before the five years are up, the remaining unforgiven balance is repaid at sale.
What credit score do you need for SmartBuy?
A minimum middle credit score of 720 — considerably higher than the 640 required for standard Maryland Mortgage Program products.
Can I use FHA or VA financing with SmartBuy?
No. SmartBuy is conventional financing only, with a 30-year fixed first mortgage financing up to 97% of the purchase price.
Can I get down payment assistance with SmartBuy too?
Yes. Borrowers may also take a flat $6,000 assistance loan, or a loan equal to 6% of the first mortgage if their income is at or below 50% of area median income. Those are deferred second mortgages repayable on sale, payoff, transfer or refinance.
Does my student loan have to be in repayment?
It can be in repayment or deferred status, but you must be current on it at reservation and at closing, and it must appear on your credit report as education-related debt.
Do you have to be a first-time homebuyer?
Generally yes, meaning no principal residence owned in the previous three years, with waivers for Targeted Area purchases and for an honorably discharged veteran using the veteran exemption. You may not own other real property at closing either way.
Can I use any lender for SmartBuy?
No. SmartBuy requires a SmartBuy-approved lender, which is a narrower list than Maryland Mortgage Program lenders generally.
What happens to SmartBuy if I refinance?
If you refinance the first mortgage to lower your rate, the SmartBuy note may remain in place and continue forgiving on its original schedule, provided the agency or master servicer is notified. Any down payment assistance second mortgage must be repaid if you refinance outside the Maryland Mortgage Program.
Can my spouse’s student debt be paid off too?
If both borrowers have eligible student debt and both balances can be fully paid within the program limits, both may be paid in full.
Sources
- Maryland Mortgage Program — Maryland SmartBuy 3.0 fact sheet updated 06/1/2026 (purpose and administration by the Community Development Administration, the 30-year conventional first mortgage financing up to 97% of purchase price, the zero percent unsecured promissory note of up to 15% of purchase price to a $25,000 maximum, forgiveness at 20% per year over five years, repayment of the unforgiven balance on sale, the full-payoff requirement and prohibition on partial payoff, student debt eligibility and documentation rules, the $6,000 and 6% down payment assistance options and the 50% AMI restriction on the 6% option, Partner Match unavailability, permitted combination with employer and nonprofit assistance, the 105% maximum combined loan-to-value and exclusion of the unsecured note from that calculation, HFA Preferred and HFA Advantage mortgage insurance, homebuyer education, property eligibility and the DHCD REO exclusion, first-time homebuyer requirements and waivers, the 720 minimum middle credit score, and the refinancing provisions).
- Maryland Mortgage Program — Product Matrix dated 7/24/2026 (SmartBuy 3.0 as conventional only, maximum debt-to-income up to 50% with automated underwriting approval, optional assistance of $6,000 or 6% of the first mortgage, Partner Match not available, external assistance allowed, approved lenders only).
- Maryland Mortgage Program — Eligibility (first-time homebuyer definition and three-year rule, Targeted Area and veteran exceptions, household income counted across members aged 18 and over, primary residence occupancy).
- Maryland Department of Housing and Community Development — program administration and the approved lender requirement.
Verified August 23, 2026 against the SmartBuy 3.0 fact sheet updated 06/1/2026 and the current MMP product matrix. The state notes that SmartBuy terms and conditions are subject to change until a borrower qualifies and locks a rate. Confirm current terms with a SmartBuy-approved lender.
This page explains how Maryland SmartBuy 3.0 generally works. It does not determine individual eligibility, is not a commitment to lend, and is not a Loan Estimate. Figures shown are arithmetic illustrations of the program mechanics, not quotes. Program terms are set by the Maryland Department of Housing and Community Development, and participating lenders, the master servicer and mortgage insurers may apply additional requirements. Maryland Homebuyer Hub is not affiliated with, endorsed by, or acting on behalf of the Maryland Department of Housing and Community Development or any government agency.