Need cash to buy a house? State and local programs offer incentives

The federal homebuyer credit is gone, but you might qualify for other programs to help with that home purchase

  • Irene Irby, a security nursing attendant for Clifton T. Perkins Hospital Center, says she might still be renting if not for programs that help with home purchases.
Irene Irby, a security nursing attendant for Clifton T. Perkins… (Baltimore Sun photo by Kim…)
September 17, 2010|By Eileen Ambrose, The Baltimore Sun

Even with home prices in the dumps, saving to buy a home may be out of reach for many. But if you work at Johns Hopkins and find a rowhouse in a downtrodden neighborhood nearby, you could qualify for as much as $29,500 to help with the down payment and closing costs.

That's money available through city, state and employer programs designed to boost home ownership. And if you don't quite fit that description, you still may be eligible for thousands of dollars to help buy a principal residence.

Such financial assistance could take on added significance since the end of the federal homebuyer tax credit, which was worth thousands of dollars and provided such a huge stimulus that it briefly turned around the sluggish housing market.

Of course, strings are attached with the various financial assistance programs. You generally have to go through homeownership counseling. You might have to buy a house in select neighborhoods or contribute a certain amount of your own money toward the purchase up front. And the assistance often comes in the form of a loan, although in many cases it's forgiven after several years.

If you meet the criteria for one program, you may qualify for another, so the incentives add up.

Irene Irby, a security nursing attendant for Clifton T. Perkins Hospital Center, says she might still be renting if not for such programs. She purchased a four-bedroom rancher with a pool in Randallstown in July. Her employer contributed $2,500 toward closing costs and down payment. The state also matched that and provided a $3,500 no-interest loan.

"It's a lot of help," says the 56-year-old. "At the closing table, I didn't have to put up thousands and thousands of dollars."

In fact, her out-of-pocket costs at closing totaled about $400. She was then able to use her other savings to replace windows at the new house and buy furniture.

While the federal homebuyer credit paid cash only after a house was purchased and the buyer filed a tax return, these other programs are designed to help with steep closing costs and down payments that can prevent people from becoming homeowners.

"It's the biggest barrier we found. Some people have stable employment, even today, but they don't have a lot of money saved," says Tonna Phelps, director of single-family housing for the Maryland Department of Housing and Community Development.

Programs generally require that you first get a certificate for completing homeownership counseling before you can apply. Baltimore residents can find a list online of authorized counselors at or by calling city officials at 410-396-3124.

The programs listed here are either from the state or for Baltimore City residents. Homebuyers in other areas should check their local governments or employers for similar incentives. Howard and Baltimore counties, for example, offer assistance with settlement costs and down payments for residents who meet certain income requirements. The funding for these county programs has run out, but more is expected by late fall.

Among the programs:

Buy Into Baltimore You can receive $4,000 for buying a house on Baltimore's east or west side. The money is a five-year forgivable loan, so that each year that you live in the house, $800 of the principal is wiped out.

One catch: You will have to repay any remaining loan balance if you sell the house before the five years are up, or if you refinance to take money out of the house to pay off debt, buy a car or for other personal uses, says Michael Guye, director of the city's Office of Home Ownership. You won't have to repay the loan if you refinance to get a lower interest rate or to tap the equity to make home repairs, he says.

This program comes with some unique obligations before you buy. The city and Live Baltimore, a nonprofit that promotes city living, conduct a trolley tour twice a year of 16 homes in target areas. You don't have to buy one of those houses, but you must stop by at least four and get a ticket validated at each to prove you made the visits. This month, the trolley rumbled through East Baltimore. In May, it heads to the west side.

Prospective buyers must present a validated ticket, counseling certificate and a contract on a house to the city's home ownership office within 90 days of the tour to qualify for the money, Guye says. And even then, only the first 50 applicants get the $4,000 for closing costs.

Baltimore City Employee Homeownership Program Employees who have worked full time for at least six months for the city are entitled to $3,000 toward buying a house in town. This, too, is a five-year loan that's forgiven in $600 increments each year you occupy the house. Until the loan balance is zero, if you quit your job, sell or refinance to pull money out of the house for purposes other than improving the house, you will have to repay the balance, Guye says.

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