Buying your first home in Maryland: the two numbers, and everything else to prepare

The two numbers: what you qualify for versus what you can comfortably pay

The most common mistake is to treat these as one number. “I pay $2,000 in rent, so I can afford a $2,000 mortgage” skips two things: a lender does not qualify you on your rent, and a mortgage payment carries costs that rent does not. The CFPB’s advice is direct: focus on what is affordable given your other priorities, not on how much you qualify for.

The lender’s number comes from your debt-to-income ratio (DTI): all your monthly debt payments, including the new mortgage, divided by your gross monthly income. The CFPB’s example is a $2,000 total in debt payments on $6,000 of gross income, a DTI of 33 percent. Every loan program sets its own limit, and your loan officer applies the rules that match the actual loan, so this page cannot tell you your limit. It can tell you that your number is the one that starts from your take-home pay, not your gross.

Your credit, months before you shop

Lenders look closely at your credit score and history, and Freddie Mac notes that even small differences in the rate you are offered change what you can afford. Pull your reports early enough to fix errors, pay down cards that are near their limits, and avoid opening new accounts while you are getting ready.

If you do not have much credit history, say so on the first call with a loan officer. Some loan programs allow other evidence of paying on time, such as rent and utilities, and the loan officer can tell you what applies.

• Get your free credit reports and dispute errors before applying.
• Do not close old accounts; length of history helps.
• Do not finance a car or furniture while you are shopping for a home.

Savings: the down payment is only part of it

Cash to close is the down payment plus closing costs plus prepaid items such as the first year of homeowners insurance and the initial escrow deposit, minus any credits and the deposit you already paid. The CFPB lists the kinds of costs that come with a mortgage: lender fees, appraisal, title services, recording, and prepaid taxes and insurance, among others.

Keep a cushion after closing. Using every dollar for the purchase leaves nothing for moving, the first repair, or a slow month. The separate down payment guide on this site explains how small a down payment can be, what mortgage insurance is, and how gift funds and Maryland assistance programs are documented.

• Ask your loan officer for an estimate of total cash to close, not only the down payment.
• Leave your savings in place; the lender will want two months of statements showing where the money has been.
• If family will help, tell the loan officer early so the gift is documented correctly.

The documents you will be asked for

Most first-time buyers in Maryland are asked for the same core set: a photo ID, recent pay stubs, W-2s and tax returns for the last two years, and two months of bank statements for the accounts you will use. If you receive child support, alimony, or income from a second job, there are documents for those too, and your loan officer will name them.

Upload documents only into the lender’s secure portal after the loan officer sends you the link. Keep complete pages rather than screenshots, and keep names and addresses consistent across everything.

Your team, and the order things happen

You will work with a loan officer, a real estate agent, a home inspector, an appraiser hired by the lender, a title or settlement company, and the insurance agent you choose for homeowners insurance. Each has a different job, and none of them can do another’s.

The order matters: credit and budget first, then a preapproval from the loan officer, then the agent and the search, then the offer, the full application, underwriting, and closing. The process guide on this site walks through each step and the documents you receive along the way.

Free, independent help exists

HUD-approved housing counseling agencies offer homebuyer education classes and one-on-one counseling, often at no cost. A counselor is not paid by anyone in your transaction, which makes them a good second opinion on the budget and the offer.

Neither a counselor nor this guide replaces legal, tax, or inspection advice. Bring those questions to the right professional, and bring your mortgage questions to your loan officer.