By the Brad Kappel Team
We walk buyers through their loan options on nearly every transaction, and the right type of mortgage often comes down to details specific to Anne Arundel County, not just a generic national comparison. Between conventional, FHA, VA, and USDA loans, the numbers and eligibility rules genuinely differ here, sometimes in ways that surprise buyers. Here's how we break down the different types of mortgages available to buyers in this market.
Key Takeaways
- Conventional loans remain the most common option for most buyers here
- Anne Arundel County's FHA limit is actually lower than its conventional limit
- VA loans offer real advantages for eligible veterans and service members
- The Maryland Mortgage Program can help with down payment assistance across loan types
Conventional Loans: The Standard Option
What Makes Conventional Loans the Default Choice
- The current conforming loan limit for Anne Arundel County
- Generally competitive rates for buyers with strong credit
- More flexibility in property type and condition than some other loan types
- Private mortgage insurance required if your down payment is under 20 percent
FHA Loans and Anne Arundel County's "FHA Gap"
Why This Gap Matters Here
- Anne Arundel County's FHA limit sits meaningfully below the conventional limit
- Homes priced in that gap may require a conventional loan instead
- FHA loans carry mortgage insurance premiums as a tradeoff for the lower down payment
- Knowing where a home's price falls relative to both limits matters early in a search
VA Loans for Military Buyers and Veterans
VA loans don't require private mortgage insurance, but most buyers pay a one-time VA funding fee instead. For first-time use with no down payment, the fee is 2.15 percent of the loan amount. It drops with a down payment of 5 percent or more and is higher for buyers who have used their benefit before. Most buyers roll the fee into the loan rather than paying it at closing. Veterans receiving VA disability compensation are exempt entirely, so it's worth confirming your status before you apply.
Why VA Loans Stand Out
- No down payment required for buyers with full entitlement
- No VA-imposed loan limit for buyers with full entitlement
- No private mortgage insurance, unlike conventional or FHA loans
- A one-time funding fee that can usually be financed into the loan and is waived for veterans receiving VA disability compensation
- A county limit of $832,750 that applies only to buyers with partial entitlement
USDA Loans: A Rural Option Worth Knowing About
Two things have to line up. The property must sit in an eligible area, and the household's income must fall within the program's limits for the county. Income is measured across the whole household, including adults who aren't on the loan, so a buyer with a qualifying address can still fall outside the program. We check both early rather than assuming either way.
What to Know About USDA Eligibility
Available only for primary residences in USDA-designated rural areas within the county
- Household income limits apply, based on everyone living in the home, not just the borrowers
- No down payment for qualifying buyers
- An upfront guarantee fee and a smaller annual fee in place of private mortgage insurance
- Property eligibility is based on the specific address, so it's worth checking even if a home doesn't seem obviously rural
Down Payment Assistance Through the Maryland Mortgage Program
The program is built primarily for first-time buyers, but MMP's definition is broader than most people expect. You count as a first-time buyer if you haven't owned residential property in the past three years. That means many former homeowners qualify again. Exceptions also apply to eligible veterans and buyers purchasing in designated Targeted Areas. Repeat buyers who don't fit those exceptions can still use MMP's Flex loan products.
Who Qualifies
- First-time buyers, meaning no one in the household has owned residential property in the past three years
- Eligible veterans and buyers in Targeted Areas, even if they've owned before
- Repeat buyers, through MMP's Flex loan products
- Households under the county's income limit, which counts everyone 18 and older living in the home, not just the borrowers
- Homes under the county's purchase price limit
- Buyers who meet minimum credit score requirements, typically starting around 640
- Buyers who will live in the home as their primary residence
- Buyers who complete an approved homebuyer education course before closing
What the Assistance Can Look Like
- A fixed $6,000 assistance loan, or an amount equal to 3, 4, or 5 percent of the first mortgage
- Up to $2,500 in additional matching funds when an employer, builder, or local partner also contributes
- Larger assistance through the HomeStart option for households at or below 50 percent of area median income
- Help paying down student loan debt at closing for eligible buyers through Maryland SmartBuy
- Income and purchase price limits vary by county and household size and are updated periodically. We always run the numbers with buyers before assuming they earn too much or don't qualify.
Why This Program Is Worth Exploring
- Down payment and closing cost assistance available through the state
- Can often be paired with FHA, conventional, or VA financing
- Eligibility varies by program and household income
- Worth checking regardless of which loan type you're considering
FAQs
Is a conventional loan always the best choice if we qualify?
Not always. Conventional loans often make the most sense for buyers with strong credit and 20 percent down, since there's no mortgage insurance. With a smaller down payment, an FHA loan may cost less for buyers with lower credit scores. Eligible veterans often come out ahead with a VA loan. We compare monthly payments and upfront costs side by side before recommending one.
Why would an FHA loan not work for a home we can otherwise afford?
In Anne Arundel County, the 2026 FHA loan limit for a single-family home is $632,500, while the conventional limit is $832,750. If the loan you need is above the FHA limit, you'd have to bring a larger down payment to get under it or switch to a conventional loan. We check where a home's price falls against both limits before you start touring.
Do VA loans have any upfront costs if there's no down payment?
Most VA buyers pay a one-time funding fee instead of mortgage insurance. For first-time use with no down payment, it's 2.15 percent of the loan amount, and most buyers roll it into the loan. Veterans receiving VA disability compensation are exempt.
Is there a limit on how much we can borrow with a VA loan?
Buyers with full entitlement have no VA-imposed loan limit. If you have partial entitlement, often because a prior VA loan is still active, the Anne Arundel County limit of $832,750 applies. Above that amount, a down payment is typically required.
How do we know if a home qualifies for a USDA loan?
Two things have to line up. The property must be in a USDA-eligible area, and your household income must fall within the county's limit. Income counts everyone living in the home, not just the borrowers. Denser areas like Downtown Annapolis and Eastport generally don't qualify. Eligibility depends on the exact address, so we check each home individually.
We've owned a home before. Can we still use the Maryland Mortgage Program?
Possibly. MMP counts you as a first-time buyer if no one in your household has owned residential property in the past three years. Eligible veterans and buyers in designated Targeted Areas qualify even if they've owned more recently. Other repeat buyers can use MMP's Flex loan products.
Can we use Maryland Mortgage Program assistance with a VA loan?
Yes. MMP offers VA first mortgages that can be paired with its down payment assistance. Eligible veterans can qualify even if they've owned a home before. Income and purchase price limits still apply, so we confirm eligibility early.
Contact the Brad Kappel Team Today
Reach out to the Brad Kappel Team, and let's talk through which mortgage option makes sense for your next home.
