Maryland SmartBuy 3.0 — wiping out student debt at closing
SmartBuy 3.0 pays off up to $25,000 of a Maryland buyer's student loan debt at closing as part of the mortgage — DHCD raised the cap from $20,000 in June 2026. The debt has to be paid in full to qualify. The mechanics are specific and the program has annual funding caps.
How the SmartBuy mechanic works
SmartBuy 3.0 is structured as a 5-year forgivable second mortgage. At closing, the program issues up to $25,000 (capped at 15% of the purchase price) toward your student loan balance — but only if that amount pays the loan(s) off in full. Partial payoffs don't qualify.
So a buyer with $18,500 in student debt across two loans can use SmartBuy to wipe both. A buyer with $35,000 in student debt can't (would need to bring $10,000 of their own to pair with $25K from SmartBuy to clear it).
Eligibility — the specifics
- First-time homebuyer (or no homeownership in past 3 years).
- Buying primary residence in Maryland.
- Household income at or below program limit (varies by county and household size).
- Credit score minimum 640 per the MMP program floor (lender overlays can run higher — we confirm per file).
- Property price within Maryland Mortgage Program limits.
- Student loan(s) must be in your name and able to be paid in full with $25K or less.
Stacking with MMP Flex
SmartBuy 3.0 pairs with one of the Maryland Mortgage Program flex products (Flex Direct, Flex 3%, Flex $6K) as the first mortgage. Total combined assistance can reach $25K–$28K when paired correctly.
The first-mortgage choice affects rate, monthly payment, and qualification ratios. We model both options on every SmartBuy file.
Common questions
What if I refinance during the 5-year forgiveness window?
Most refinances during forgiveness trigger the recapture provision — you'd owe back the unforgiven portion. We coach timing carefully so you don't trigger this accidentally.
Are private student loans eligible?
Yes. Both federal and private student loans qualify, as long as the loan is in the buyer's name.
Does the SmartBuy second affect my DTI?
The second mortgage payment is deferred and forgivable — it's excluded from DTI calculations under the program's underwriting. The student loan that gets paid off DOES come off your DTI, which is the bigger qualification benefit.
When does the program run out of funding?
Funding renews annually. Some years it lasts most of the year; some years it depletes by Q2. We check live availability before quoting.
Does SmartBuy have to pay off my student loans in full?
Yes — this is the rule that surprises people. At least one borrower's student debt must be paid off IN FULL at closing; partial payoff isn't permitted. If your balance exceeds the cap (15% of the purchase price, max $25,000), you bring the difference to closing yourself. Minimum $1,000 balance to use the program. A buyer with $18,500 across two loans can clear both; a buyer with $35,000 needs $10,000 of their own at the table.
How Mike + Cornerstone help
SmartBuy is one of Maryland's most distinctive first-time buyer programs. The structure is specific and the timing matters. We'll check your student loan balances, eligibility for the first-mortgage pairing, and current program availability before recommending the path forward.
Talk to Mike first Get pre-approved
No pressure, no commitment. Free 20-minute consult. Mike will look at your scenario and tell you straight whether this works for you.