The Maryland Department of Housing and Community Development said Tuesday it will extend for the long-term a program that offers reduced mortgage rates for veterans and active-duty military, while scaling back the initial incentive.

The new "Maryland Homefront" loans will carry interest rates a quarter of a percent lower than those offered under Maryland Mortgage Program, or about 3.75 percent. That's half the discount of the first Homefront loans announced just before July 4 two years ago.

At the time, the state had reserved $50 million for the incentive. The new structure reflects increased interest rates in the market as a whole, as well as an effort to make the program ongoing, said Bill Ariano, deputy director for the DHCD division of finance.

"We developed a program that is sustainable," he said. "The discount is not as deep but it is still a significant difference."

A total of 161 veterans and military families have participated in the program since 2012, according to the state. Homefront borrowers are also eligible for a federal tax credit and other forms of assistance.

nsherman@baltsun.com