Maryland’s SmartBuy program, which helps first-time homebuyers free themselves from student debt to buy state-owned REO properties, is featured in the March 2018 edition of the Down Payment Report.

The program, launched in 2016, has turned 36 buyers into homeowners with no student debt in less than two years. Now the state is launching a revised and expanded program later this year.

To qualify, borrowers must:

• Have not owned a home in the past three years, unless buying in the designated targeted areas;
• Meet local household income limits, which range from $92,500 to $154,420 depending on location;
• Not have liquid assets equal to 20 percent or more of the property’s sales price; and
• Have a balance on their student loan debt less than 15 percent of the sales price of the property they want to buy. If their debt is larger than 15 percent, they must pay down the debt to be less than 15 percent by closing. (The average SmartBuy home costs about $206,000.)

“The average student debt for a college graduate in Maryland is $27,000,” Craig Renner, SmartBuy’s administrator, told Down Payment Report. “In addition to retiring student debt, the second thing our program does is sell foreclosed homes at their market price. The houses sold under this program support local home values.”

Once a foreclosure hotbed, Maryland still ranks third in foreclosures nationally. State-owned REOs are rehabbed to be market-ready and listed by approved brokers. Approved lenders provide a second trust loan on behalf of Maryland’s housing agency to pay off the balance of the student loan and Maryland provides down payment assistance up to 4 percent of the purchase price.