Most Maryland buyers can choose among three loan types — FHA, conventional, and VA — and the right one usually comes down to your down payment, your credit, and whether you’ve served. Each has real trade-offs on mortgage insurance and cost. Here’s how they compare in 2026, plus the Maryland down-payment help that layers on top of all three.
Key Takeaways
- Down payments: VA allows 0%, conventional as low as 3%, FHA 3.5% (HUD, Fannie Mae, VA).
- Mortgage insurance is the deciding factor: conventional PMI cancels at 20% equity; FHA insurance often lasts the life of the loan; VA has no monthly mortgage insurance.
- In 2026, Maryland’s conforming loan limit is $832,750 (up to $1,249,125 in high-cost Montgomery County); FHA runs from a $541,287 floor to a $1,249,125 ceiling.
- Maryland’s Mortgage Program adds down-payment assistance on top of any of these — a $6,000 deferred loan or a percentage of your mortgage.
FHA vs conventional vs VA: the quick comparison
The fastest way to choose is to line up the three side by side. VA wins on cost if you’re eligible; conventional wins long-term if you can put more down and have solid credit; FHA is the most forgiving on credit.
| FHA | Conventional | VA | |
|---|---|---|---|
| Min. down payment | 3.5% | 3% | 0% |
| Min. credit score | 580 (500 with 10% down) | ~620 | No VA-set minimum |
| Mortgage insurance | 1.75% upfront + ~0.55%/yr, often for the life of the loan | PMI, cancellable at ~80% LTV | None (one-time funding fee) |
| Best for | Lower credit / smaller down payment | Strong credit, avoiding long-term MI | Eligible veterans & service members |
FHA loans in Maryland
FHA is the most accessible option on credit. You can put down as little as 3.5% with a credit score of 580 or higher, and scores from 500–579 qualify with 10% down (HUD). The trade-off is mortgage insurance: FHA charges a 1.75% upfront premium plus an annual premium of about 0.55% (HUD).
The catch most buyers miss: at the minimum 3.5% down, that annual FHA insurance generally lasts the life of the loan — it doesn’t fall off at 20% equity the way conventional PMI does (HUD). Many FHA borrowers later refinance into a conventional loan once they’ve built equity, precisely to shed that premium.
Conventional loans
Conventional loans reward stronger credit. Through programs like Fannie Mae’s HomeReady, you can put down as little as 3% (Fannie Mae), and you’ll generally want a credit score around 620 or higher to qualify (CFPB).
The big advantage is mortgage insurance you can get rid of. Conventional PMI can be requested for cancellation at about 80% loan-to-value and automatically terminates at 78% (Fannie Mae). Over a few years of payments and appreciation in Maryland’s market, that can save a meaningful amount versus a life-of-loan premium.
VA loans
If you’re an eligible veteran, active-duty service member, or qualifying surviving spouse, the VA loan is usually the strongest option in the country: $0 down and no monthly mortgage insurance (VA). Instead of ongoing insurance, the VA charges a one-time funding fee — about 2.15% on a first use with no down payment, 3.3% on later uses — and that fee is waived entirely for veterans with a service-connected disability.
With the Naval Academy, Fort Meade, and Aberdeen all in the state, VA loans are especially common across Maryland — we cover them in depth in our Maryland VA loan guide.
What are the 2026 loan limits in Maryland?
Loan limits set how much you can borrow under each program, and they reset every January. For 2026, the baseline conforming limit is $832,750 for a one-unit home, rising to $1,249,125 in high-cost areas — which in Maryland includes DC-adjacent Montgomery County (FHFA). FHA limits run from a $541,287 floor to a $1,249,125 ceiling depending on the county (HUD).
Because Maryland median prices sit well under these limits — the statewide median was $465,000 in June 2026 (Maryland REALTORS®) — most buyers have room under all three programs. For context, the 30-year fixed rate averaged 6.66% the week of Aug 6, 2026 (Freddie Mac); rates move weekly, so confirm the current number when you lock.
Stack Maryland down-payment help on top
Whichever loan you choose, Maryland’s Mortgage Program (MMP) can layer down-payment assistance on top through the Department of Housing (Maryland DHCD). Options include a flat $6,000 deferred, zero-interest second-lien loan (1st Time Advantage / Flex), or a 3%, 4%, or 5% assistance loan sized to your first mortgage, plus a Partner Match of up to $2,500. The assistance is repaid only when you sell, refinance, or pay off the home. Our Maryland Mortgage Program guide and first-time buyer programs guide walk through eligibility.
So which loan is right for you?
A simple rule of thumb: if you’re a veteran, start with VA — zero down and no monthly insurance is hard to beat. If your credit is strong and you can put a bit more down, conventional usually wins over time because you can cancel PMI. If your credit is still building, FHA opens the door with a lower score, and you can refinance out of the mortgage insurance later. The best move is to get pre-approved and compare real numbers for your situation — the monthly payment, not just the rate.
Find your best-fit loan
Talk with a Next Step Realty agent and we’ll connect you with a trusted Maryland lender to compare FHA, conventional, and VA side by side for your budget — and check whether Maryland down-payment assistance fits. Explore our financing resources to get started.
Frequently Asked Questions
Is an FHA or conventional loan better in Maryland?
It depends on your credit and down payment. FHA allows a 580 credit score and 3.5% down but its mortgage insurance often lasts the life of the loan. Conventional needs about a 620 score and 3% down, but the PMI cancels at 20% equity — cheaper long-term if you qualify (HUD; Fannie Mae, 2026).
How much do you need to put down on a house in Maryland?
Less than most people think. VA loans allow 0% down for eligible buyers, conventional loans start at 3%, and FHA at 3.5% (VA; Fannie Mae; HUD, 2026). Maryland’s Mortgage Program can add a $6,000 or percentage-based down-payment assistance loan on top.
What are the 2026 loan limits in Maryland?
The 2026 conforming loan limit is $832,750 for a one-unit home, up to $1,249,125 in high-cost Montgomery County (FHFA). FHA limits range from a $541,287 floor to a $1,249,125 ceiling by county (HUD). Maryland median prices sit well under these, so most buyers have room.
Do VA loans have mortgage insurance?
No. VA loans require no monthly mortgage insurance (VA). Instead there’s a one-time funding fee — about 2.15% on a first use with no down payment — which is waived for veterans with a service-connected disability.
Can you use down-payment assistance with an FHA or VA loan in Maryland?
Yes. Maryland’s Mortgage Program down-payment assistance layers on top of FHA, VA, or conventional first mortgages (Maryland DHCD). It’s a deferred, zero-interest loan repaid only when you sell, refinance, or pay off the home.
Sources
- HUD (FHA) — minimum down payment, credit score, and MIP structure, retrieved 2026-08-10, https://answers.hud.gov/FHA/s/article/What-is-the-minimum-down-payment-requirement-for-FHA
- HUD — Upfront/annual MIP, retrieved 2026-08-10, https://www.hud.gov/hud-partners/housing-upfront-mip
- HUD No. 25-145 — 2026 FHA loan limits, retrieved 2026-08-10, https://www.hud.gov/news/hud-no-25-145
- Fannie Mae — HomeReady 3% down + cancellable PMI, retrieved 2026-08-10, https://singlefamily.fanniemae.com/originating-underwriting/mortgage-products/homeready-mortgage
- U.S. Dept. of Veterans Affairs — VA funding fee, no monthly MI, retrieved 2026-08-10, https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/
- FHFA — 2026 conforming loan limits, retrieved 2026-08-10, https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026
- CFPB — credit-score guidance, retrieved 2026-08-10, https://www.consumerfinance.gov/owning-a-home/prepare/get-your-money-situation-in-order/
- Freddie Mac PMMS — 30-yr rate 6.66% (week of Aug 27, 2026), retrieved 2026-08-31, https://www.freddiemac.com/pmms
- Maryland DHCD — Maryland Mortgage Program Down Payment Assistance, retrieved 2026-08-10, https://mmp.maryland.gov/home-loans/down-payment-assistance
- Maryland REALTORS® — Housing Statistics June 2026, retrieved 2026-08-10, https://www.mdrealtor.org/HousingStats