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Get Matched Free →Howard County Settlement Downpayment Loan Program (SDLP)
About the Howard County Settlement Downpayment Loan Program (SDLP)
The Howard County Settlement Downpayment Loan Program (SDLP) lends up to $40,000 toward the down payment and closing costs on a home in Howard County, Maryland. The county Department of Housing and Community Development runs it through approved mortgage lenders. Payments are deferred until you sell, refinance or stop living in the home, and the rate is 2 points below your first mortgage rate, capped at 3%.
SDLP has five loan tiers, each with its own income cap effective May 1, 2026. HomeStarter ($40,000) is for households at or below 80% of Baltimore-area median income: $74,800 for one person and $106,800 for four. HomeSteader ($25,000) allows up to 80% of Howard County median, or $117,586 for four. DreamMaker ($15,000) allows 100%, or $146,982 for four. Revitalization ($25,000) and Workforce Initiative ($4,300) allow 110%, or $161,680 for four. The first three tiers require that you have not owned a home in the past 3 years. The price cap is $683,977, credit follows your lender's minimum, and total debt cannot exceed 45% of gross income. The rule that surprises buyers: you must put in all savings above two months of mortgage payments.
HomeStarter is the only tier with forgiveness: 10% of principal and interest after 5 years as your primary residence, 20% after 10 years and 30% after 15. Workforce Initiative loans carry 0% interest and shrink 10% a year while a household member works full-time in the county. Compared with the Maryland Mortgage Program's 1st Time Advantage 6000 ($6,000 at 0%), SDLP lends far more but charges interest, so the balance grows until payoff.
How much assistance
Eligibility
- Income limits: Effective 5/1/2026, 1/4/8-person households: HomeStarter (80% Baltimore MSA) $74,800/$106,800/$141,000; HomeSteader (80% Howard County) $82,310/$117,586/$155,213; DreamMaker (100% HC) $102,888/$146,982/$194,016; Revitalization and Workforce Initiative (110% HC) $113,177/$161,680/$213,418.
- Purchase price limit: $683,977
- First-time buyer required: Yes — No ownership of a residence in the past 3 years, or a joint owner who must buy alone after divorce, separation or a co-owner's death. Required for HomeStarter, HomeSteader and DreamMaker; not required for Revitalization and Workforce Initiative loans.
- Geographic restrictions: Must purchase a home in Howard County.
- Homebuyer education required: Yes
How to Apply for Howard County Settlement Downpayment Loan Program (SDLP)
Step 1: Match your income to a loan tier
Compare your household income to the chart in the SDLP information packet at howardcountymd.gov/DHCD-SDLP, effective May 1, 2026. Income counts every household member age 18 or older who will live in the home, except full-time students. A four-person household earning $106,800 or less qualifies for HomeStarter ($40,000), and one earning up to $146,982 qualifies for DreamMaker ($15,000). Co-signers and non-occupying co-borrowers are not allowed.
Step 2: Check your savings against the asset rules
You need liquid savings of at least one month's mortgage payment (principal, interest and escrows) plus $1,000. You must also contribute the greater of $1,000 or all liquid assets above two months of payments, so SDLP only fills a real gap. Checking, savings, CDs and stocks count, but retirement accounts do not. Keep your most recent federal tax return ready, because the application requires it.
Step 3: Choose a participating primary lender
Only lenders can request SDLP funds, so start with a lender that works with Howard County DHCD. Ask Linda Phillips, SDLP Coordinator, for the current lender list at 410-313-6318, option 1, or lphillips@howardcountymd.gov. Your first mortgage must be a fixed-rate loan with a term of at least 20 years and equal monthly payments. FHA 203K loans are not allowed except with a Revitalization loan.
Step 4: Get approved and finish homebuyer counseling
Your lender approves the first mortgage, certifies your SDLP eligibility and arranges pre-purchase counseling with DHCD or a county-approved counselor. You receive a certificate that you need in order to settle. Total monthly debt, including the new mortgage, cannot exceed 45% of gross income. The lender may not charge you any fee for processing the SDLP loan, and your first mortgage pricing must match its non-SDLP pricing.
Step 5: Find a home under $683,977 and sign a contract
The home must be in Howard County, cost no more than the $683,977 Maryland CDA price limit, and be your primary residence. Your sales contract must be contingent on SDLP financing. For a Revitalization loan, the property must be in ZIP code 21045 or 20723 and be in foreclosure, a short sale or bank-owned. SDLP can finance up to 3 discount points but no more.
Step 6: Lender reserves funds and you close
After you have a contract and first mortgage approval, your lender submits the complete SDLP package to DHCD at least 9 business days before closing. Funds are first come, first served and not guaranteed, so push your lender to submit early. The loan is disbursed in one lump sum at settlement through a DHCD-approved settlement agent and secured by a lien that usually sits behind your first mortgage.
Real Cost Example
On a $475,000 home in Columbia, the area's estimated median price, an FHA loan requires 3.5% down, or $16,625. A HomeStarter buyer can finance that down payment with SDLP, since HomeStarter allows financing up to 10% of the price regardless of loan type. With any first mortgage rate above 5%, the SDLP rate sits at the 3% cap, and no payments are due until sale or refinance.
Estimated closing costs in Columbia run $9,500 to $14,500, bringing total cash needed to $26,125 to $31,125. The buyer contributes at least $1,000, so SDLP would cover $25,125 to $30,125, well under the $40,000 HomeStarter cap. Any seller credit toward closing costs shrinks the SDLP loan, which matters because SDLP accrues interest every year it stays open.
A buyer who also qualifies for the Maryland Mortgage Program's 1st Time Advantage 6000, a $6,000 deferred second loan at 0%, could cut the SDLP draw to about $19,125 to $24,125. Total assistance stays at $25,125 to $30,125, but less of it accrues interest. SDLP rules allow federal and state assistance loans toward the down payment, with lien priority set by loan size.
Combining With Other Programs
SDLP rules let you use loans from federal or state assistance programs toward your down payment and settlement costs. The main pairing is the Maryland Mortgage Program: 1st Time Advantage 6000 adds a $6,000 deferred second loan at 0%, and the 3%, 4% and 5% options add a deferred loan equal to that share of the first mortgage. On a $450,000 first mortgage, the 5% option equals $22,500. Each lien's priority is set by its relative amount.
You cannot borrow any part of your own required contribution, which is at least $1,000. The Maryland HomeCredit mortgage credit certificate cannot be layered with an MMP 1st Time Advantage loan, so choose between them if you use MMP. FHA 203K renovation loans are excluded from every SDLP tier except Revitalization. Confirm your combination with Linda Phillips, SDLP Coordinator, at 410-313-6318, option 1, before your lender submits.
Seller credits are the simplest way to shrink the SDLP balance, since every dollar the seller pays is a dollar you do not borrow at up to 3%. Buyers who work full-time in Howard County can use the $4,300 Workforce Initiative tier for half of transfer and recordation taxes. Buyers with student debt can check Maryland SmartBuy, and buyers with disabilities can check Maryland HomeAbility.
Pros and Cons
SDLP lends up to $40,000 to HomeStarter buyers, nearly seven times the $6,000 from the Maryland Mortgage Program's 1st Time Advantage 6000. Nothing is due until you sell, refinance or pay off the first mortgage, and the rate is capped at 3%. HomeStarter borrowers who stay 15 years get 30% of principal and interest forgiven, and Workforce Initiative loans are fully forgiven after 10 years of county employment. Income limits reach $161,680 for a family of four on the Revitalization and Workforce tiers, and the $683,977 price cap clears the estimated $475,000 median in Columbia.
The biggest drawback is cost: SDLP is a loan that accrues interest at up to 3%, and HomeStarter's partial forgiveness tops out at 30% after 15 years. DreamMaker tops out at $15,000, which barely covers the $13,000 to $20,000 estimated closing costs in Ellicott City, where the estimated median price is $660,000. You must spend savings above two months of payments first, funds are first come, first served, and packages are due 9 business days before closing. Repeat buyers over the first-time rule can compare the MMP Flex 6000, which is open to first-time and repeat buyers.
Frequently Asked Questions
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Program details last verified: October 13, 2026