First-Time Buyers · August 29, 2026 · 7 min read
I got an email Tuesday morning from a first-time buyer I've been working with in Harford County. Subject line: "They said no??"
She'd been pre-approved. Her credit score was 680. Income well within the Maryland Mortgage Program limits. She'd saved $8,000 for closing costs and was counting on MMP's down payment assistance to cover the rest. We'd already toured six homes for sale in Harford County. She had her eye on a little Cape Cod in Abingdon.
Then the lender came back and said the assistance was denied.
Not the loan. Just the assistance piece.
Her question to me: "What did I do wrong?"
The answer: Nothing wrong. Just something nobody explained until it was too late.
Here's what happened. She'd been paying off a car loan aggressively for the past eight months, doubling up payments to get it done before buying a house. Smart, right?
Except those extra payments tanked her bank balance. When the underwriter pulled her final asset verification, she didn't have two months of reserves left after closing costs. The Maryland Mortgage Program requires reserves if your credit score is under 700 and you're using down payment assistance.
It's buried in the guidelines. Most buyers never see it until they're sitting at the kitchen table with tears in their eyes asking what happened.
I spent twenty years teaching high school English in Baltimore County before I became a Maryland realtor, and this is the kind of fine print that makes me furious. Not because the rule is unreasonable, but because nobody teaches it upfront.
So let's fix that.
If you're looking at homes for sale in Cecil County, Baltimore County, Anne Arundel, or anywhere in the Baltimore-Washington corridor, here's what kills down payment assistance applications more often than bad credit:
Reserves. Most programs want to see you can survive two mortgage payments if something goes sideways. That means cash left in the bank after closing. Not your 401(k). Not your cousin's promise to help. Liquid cash.
Debt-to-income at the edge. MMP and DC's Home Purchase Assistance Program (HPAP) will stretch to 50% DTI in some cases, but if you're using assistance and you're at 48%, underwriters get nervous. One unexpected HOA fee or a property tax surprise and you're over.
Property condition. This one surprises people. If the appraisal comes back and the house needs a new roof or the HVAC is on its last legs, some assistance programs walk. They're lending you taxpayer money. They don't want to hand it to someone buying a money pit.
Recent credit events. A 640 score is technically eligible for MMP. But if you just hit 640 last month after a collections dispute, underwriters see that. They want stability, not a Hail Mary.
Gift funds that aren't really gifts. If your mom "gifts" you $10,000 but the underwriter sees a $10,000 withdrawal from your account two weeks earlier, that's a loan. It counts against you. Don't try it.
My buyer in Harford County didn't give up. Neither should you.
She lives in Harford County but works in Baltimore City. That means she's eligible for programs in both places. We pivoted to looking at homes for sale in Baltimore City, where the city's own assistance programs have slightly different reserve requirements.
If you're licensed across state lines like I am, this gets interesting. A buyer in Cecil County might qualify more easily for Pennsylvania's PHFA Keystone Advantage Assistance Loan if they're willing to look at homes for sale in York County, Pennsylvania. Same commute to work. Different rulebook.
Prince George's County? You might have better luck with DC HPAP if you can handle the District's price caps.
It's not about gaming the system. It's about finding the program that matches your financial profile.
In this market, with new listings hitting a four-month high and builders sitting on inventory, sellers are more willing to help than they were two years ago.
We wrote an offer on that Cape Cod with a request for 3% seller concessions toward closing costs. The seller countered at 2%. Done.
That freed up $6,000 of her saved cash, which she kept in the bank as reserves. Resubmitted the MMP application. Approved.
Seller concessions aren't charity. They're a negotiation tool. If you're working with a realtor in Harford County or anywhere else who isn't bringing this up when assistance falls short, ask why not.
I know. Sounds backwards.
But if you've got 5% saved and the assistance program is denying you because your DTI is 49%, sometimes the math works better without the assistance. Conventional loans through Freddie Mac's Home Possible or Fannie Mae's HomeReady allow 3% down and don't carry the same reserve requirements.
You pay PMI. But PMI drops off when you hit 20% equity. The assistance programs often come with a second lien that sits there for years or requires repayment if you sell or refinance within a certain window.
Run both scenarios with your lender. I've had buyers in Anne Arundel County and Howard County who thought they needed assistance, ran the numbers, and realized they were better off without it.
First: Stop making extra payments on anything until you close. I'm serious. If you've got $12,000 saved and you're putting $500 a month extra toward your student loans, stop. Let the loans ride. Keep the cash visible.
Second: Talk to a lender who actually does these programs regularly. Not every mortgage officer knows the reserve rules for MMP or the income limits for PHFA. I work with a handful of lenders across Maryland, D.C., Pennsylvania, and Delaware who live and breathe this stuff. Reach out and I'll connect you.
Third: If your credit score is hovering right at the minimum, wait. I know that's hard when you're tired of renting and you see homes for sale in Montgomery County or Baltimore City that you love. But if you're at 640 and you can get to 660 in three months, your approval odds and your interest rate both improve. The FHA's decision to keep classic FICO scoring means your score model won't be changing anytime soon, so you've got stability to plan around.
Fourth: Read the actual program guide. Maryland Mortgage Program guidelines are public. DC HPAP rules are online. PHFA publishes everything. It's dry reading, but it's your money. Spend an hour.
Down payment assistance is a tool. It's not a rescue plan.
If your finances are held together with duct tape and hope, assistance won't fix that. You'll get denied, or worse, you'll get approved and then spend three years house-poor and miserable because you bought at the edge of your budget.
But if you're genuinely close, if you've saved what you can and you just need a bridge to cover the gap between your 3% and the seller's expectation, these programs are gold. I've watched teachers and nurses and HVAC techs in Harford County, Cecil County, and Baltimore City buy homes they never thought they'd qualify for.
You just have to know the rules before you play.
My buyer in Harford County closed yesterday. She's got keys to that Cape Cod in Abingdon, two months of reserves in the bank, and a 6.5% rate locked in before Warsh's rate-hike talk pushes things higher.
It took us three tries and two different programs. But she's in.
If you're stuck in the denial loop, you're not out of options. You just need someone who knows where the trap doors are. Let's talk through your scenario and figure out what Plan B looks like for you. I've been doing this long enough to know that "no" usually just means "not this way."
Katrina Kirton Sherrod, REALTOR® · Samson Properties · Licensed in MD, DC, PA & DE · 443-616-9770 · Katrina@kkstherealtor.com
“Ninety percent of all millionaires become so through owning real estate.” — Andrew Carnegie