Maryland has launched a new program that will pay off student loan debt for homebuyers who purchase certain properties through the state.
The Department of Housing and Community Development SmartBuy program is aimed at helping buyers burdened with student loans. It also reduces the inventory of homes acquired by the state's Community Development Administration after foreclosures on properties purchased using the Maryland Mortgage Program.
The department has allocated about $10 million to the SmartBuy program, enabling about 40 to 50 households to participate, said DHCD spokeswoman Sara Luell. The first sale through the program, a $200,000 three-bedroom home in Bel Air, closed in September during a soft launch, she said.
To participate, a qualified buyer must make a down payment of at least 5 percent, financing the rest of the purchase with a mortgage through a selected lender.
A buyer's outstanding student debt is paid off at the time of the purchase, through a second mortgage with a zero percent interest rate. That loan — which can be no more than 15 percent of the sales price — is forgivable over five years.
"With the launch of SmartBuy, Maryland is among the first in the nation to actively address student debt as an obstacle to homeownership," Lt. Gov. Boyd Rutherford said in a statement.
The 15 homes currently available through the SmartBuy program are located throughout the state and range in price from $70,000 to about $310,000, according to the website. Luell said they were selected to be attractive to younger buyers.
The General Assembly authorized the SmartBuy program this year at the request of the Gov. Larry Hogan's administration, expanding on other Maryland Mortgage Program offerings for homebuyers with student loan debt. The Maryland Mortgage Program is funded primarily through secondary market sales of Ginnie Mae and Fannie Mae mortgage-backed securities, according to the policy note that accompanied the bill.