Yes, an eligible Maryland Mortgage Program loan may generally be structured with both down payment assistance and an allowable seller credit. The assistance can help with down payment or closing costs, while the seller credit can cover eligible closing expenses. The loan type, actual costs, appraisal, contract, and program limits control the final structure.

Why buyers confuse these two sources of money

Down payment assistance and seller credits both reduce the amount a buyer may need to bring to closing, but they are not interchangeable. They come from different sources, follow different rules, and may have different repayment consequences.

Maryland Mortgage Program, or MMP, assistance is tied to an eligible MMP first mortgage. Depending on the selected product, the assistance may be a fixed amount or a percentage of the first mortgage. A seller credit is negotiated in the purchase contract and is funded by the seller at settlement. It is generally limited to eligible buyer costs.

What current MMP assistance options look like

As of August 9, 2026, the Maryland Mortgage Program lists several assistance choices. The 1st Time Advantage line includes a $6,000 option and deferred second-lien options equal to 3%, 4%, or 5% of the first mortgage. HomeStart provides assistance equal to 6% of the first mortgage for eligible households at or below 50% of Area Median Income.

MMP Flex is available to qualifying first-time and repeat buyers. Its published options include a $6,000 deferred loan and a 3% deferred loan. Direct products do not include MMP assistance, although the program states that eligible external assistance may be used.

Many of these assistance options are zero-interest deferred loans, not grants. No monthly payment may be due during the first mortgage, but the assistance can become payable when the first mortgage is repaid, the home is sold or transferred, or the loan is refinanced. Buyers should understand that future obligation before choosing a product.

What a seller credit can cover

A seller credit may be used for eligible closing costs and prepaid items when permitted by the mortgage program. Examples may include lender charges, title and settlement services, prepaid interest, initial escrow deposits, homeowners insurance, discount points, and other allowable expenses shown on the closing disclosure.

A seller credit is not normally a substitute for the required down payment. Fannie Mae specifically states that interested-party contributions cannot make the borrower's down payment, satisfy a minimum borrower contribution, or meet reserve requirements. FHA currently permits eligible interested parties to contribute up to 6% of the sales price toward defined closing costs and prepaid items. Conventional limits vary with occupancy, loan-to-value ratio, and transaction type.

The relevant limit is only one part of the calculation. A buyer also needs enough eligible charges to use the credit. A contract may promise a $12,000 credit, but if only $9,000 can be applied under the final loan and closing figures, the remaining $3,000 generally cannot become cash in the buyer's pocket.

How MMP assistance and a seller credit can work together

The cleanest strategy assigns each source to a real need. Assistance may cover part of the required down payment and, if permitted, part of the closing costs. The seller credit can then cover eligible costs that remain. The lender and settlement company document the sources and uses on the final closing figures.

Consider an illustrative buyer with a $350,000 first mortgage and an eligible 3% assistance loan. Three percent of $350,000 is $10,500. If the buyer also negotiates a $7,500 seller credit, the transaction has two potential resources totaling $18,000. That does not automatically reduce the buyer's cash requirement by $18,000. The buyer still needs eligible uses for each source, must meet any required borrower contribution, and cannot exceed the applicable seller-contribution limit.

This example is intentionally not a loan quote. The first-mortgage amount, assistance percentage, loan type, sales price, appraisal, closing costs, income eligibility, and program availability must all be verified for the actual transaction.

The three calculations that should happen before an offer

1. Calculate the buyer's real cash requirement

Start with the required down payment, lender and title costs, prepaid expenses, escrow deposits, Maryland transfer and recordation charges, and a reasonable reserve for changes. Then subtract the earnest-money deposit and verified eligible assistance. This produces a working cash gap instead of an arbitrary seller-credit request.

2. Test the seller credit against the mortgage rules

The maximum allowable percentage is not automatically the correct request. Compare the proposed credit with the lower of the estimated eligible costs and the applicable program limit. For conventional financing, Fannie Mae calculates maximum financing concessions using the lower of the sales price or appraised value. An excess contribution may be treated as a sales concession and affect the underwriting value.

3. Leave room for the figures to change

Property taxes, homeowners insurance, prepaid interest, title charges, appraisal results, and the closing date can change the final numbers. The offer strategy should be based on a detailed estimate, and the lender should update it after the contract is accepted and again before closing.

Common mistakes that can waste a seller credit

  • Requesting a round number without estimating eligible closing costs.
  • Assuming the seller credit can satisfy the required down payment.
  • Counting the same expense against both assistance and the seller credit.
  • Ignoring how an appraisal below the sales price may change the calculation.
  • Forgetting that many MMP assistance options create a deferred second lien.
  • Waiting until closing week to decide how the available credit will be used.

If the credit appears likely to exceed eligible costs, possible options may include reducing the credit through a contract amendment, using an allowable portion for discount points, or negotiating another permitted contract change. These choices require agreement among the parties and approval under the applicable loan rules. A price reduction does not always produce the same immediate cash-to-close benefit as a seller credit.

Who may qualify for the Maryland Mortgage Program?

MMP eligibility is broader than many buyers expect, but it is not automatic. The state says applicants generally must occupy the home as a primary residence, meet household-income and purchase-price limits, satisfy applicable credit and loan requirements, and not own other residential property at closing. Liquid assets above 20% of the purchase price may affect eligibility.

First-time buyers who qualify may use MMP throughout Maryland. The state defines a first-time buyer for MMP purposes as someone who has not owned residential property during the previous three years, subject to listed exceptions. Repeat buyers may use eligible Flex products. MMP also requires approved homebuyer education for the product lines discussed here.

Howard County is currently listed as a non-targeted county, so targeted- area exceptions do not apply there. Buyers considering the county can review the Howard County mortgage guide and the separate explanation of Maryland transfer and recordation taxes.

A practical offer-planning checklist

  1. Confirm preliminary MMP and first-mortgage eligibility with an approved lender.
  2. Select the assistance option that fits the buyer's cash need and future plans.
  3. Estimate the down payment and every major closing-cost category.
  4. Identify which costs the assistance can cover.
  5. Calculate the remaining eligible costs before requesting a seller credit.
  6. Check the credit against the applicable conventional, FHA, VA, or USDA rules.
  7. Review how the appraisal and closing date could change the figures.
  8. Update the estimate when the offer, loan, insurance, or title charges change.

The broader guide to seller-paid closing costs explains unused credits, contribution limits, appraisal risk, and rate buydowns. Buyers who are still developing their strategy can use the Path 2 Buy planning process before they begin making offers.

Coordinate the assistance before you write the offer

Dan Flavin can review the estimated payment, cash to close, MMP eligibility, seller-credit strategy, and repayment considerations as one plan. Program availability and qualification must be confirmed for the individual borrower and property.

Call Dan at 410.935.3528Start an application

Frequently asked questions

Can MMP down payment assistance be combined with a seller credit?

Yes, an eligible MMP loan may generally be structured with both sources. The first mortgage, MMP product, actual costs, appraisal, contract, and all applicable guidelines must support the combination.

Can a seller credit pay the buyer's down payment?

Generally no. Seller credits are normally limited to eligible closing costs, prepaid items, and permitted financing concessions. They do not replace a required down payment or reserve requirement under conventional guidelines.

What happens if the seller credit is larger than the eligible costs?

The unused portion generally cannot be paid to the buyer as cash. The parties may need to amend the contract or restructure eligible costs before closing, subject to the loan program, appraisal, lender, and seller agreement.

Is MMP assistance free money?

Not necessarily. Many MMP options are zero-interest deferred second liens that become due when the first mortgage ends through sale, transfer, refinance, repayment, or another specified event.

Primary sources

This article is educational and is not legal, tax, credit, or financial advice. Program availability, income and purchase-price limits, assistance terms, seller-contribution limits, and underwriting rules can change. Eligibility requirements vary and must be confirmed for the borrower, property, loan, and transaction. All loans are subject to approval. Equal Housing Lender.