Prince George's County First Time Home Buyer Grant: Is It Free Money? (Part 2 of 30: The Prince George's County Answer Guide)
This is Part 2 of The Prince George's County Answer Guide from Donnell Williams Jr. and DMV Prime Properties, a 30-part series answering the questions buyers, sellers, and people relocating are actually searching about Prince George's County, Maryland. Many buyers search for a Prince George's County first time home buyer grant, and this post explains what that money actually is.
The Prince George's County first time home buyer grant people search for is usually Pathway to Purchase, and it is not a grant at closing. It is a zero-interest deferred loan of up to $50,000. It becomes fully forgiven only after 15 years as your primary residence, and repayment may be due if you sell, transfer, refinance, or move out sooner.
Key Takeaways
- Pathway to Purchase is a forgivable deferred loan, not a grant you never repay, according to Prince George's County DHCD.
- No part of the loan is forgiven in years 1 through 5.
- Starting in year 6, 10% is forgiven each year, and the loan is fully forgiven after 15 years of owner occupancy.
- Selling, transferring, refinancing, or no longer living in the home before forgiveness is complete may trigger repayment.
- The loan charges no interest and requires no monthly payment, so the risk is about timing, not monthly cost.
Is there a Prince George's County first time home buyer grant?
Not in the way most people picture a grant. A true grant is money you never repay under any condition. Prince George's County's main assistance program, Pathway to Purchase, is structured as a loan with a forgiveness schedule. The county's Department of Housing and Community Development (DHCD) describes it as a "zero-interest deferred loan" for down payment and closing costs.
If you hold the home long enough, the result looks like a grant, because the balance drops to zero. If you sell or refinance early, you may need to pay it back from your proceeds.
Since 2000, starting as an intern at Asset Realty in Prince George's County, Donnell Williams Jr. has watched buyers treat assistance as "free money" and then get surprised years later at a sale or refinance. The fix is simple: understand the schedule before you sign.
Grant, forgivable loan, or deferred loan: what is the difference?
These three terms get mixed up online. Here is what each one means in plain language.
- Grant: Money given to you with no repayment, often with only a short occupancy requirement or none at all.
- Deferred loan: A loan with no monthly payments. The balance is due later, usually when you sell, refinance, or pay off your first mortgage.
- Forgivable loan: A loan that shrinks or disappears over time if you meet conditions, such as living in the home.
Pathway to Purchase is a deferred loan that is also forgivable. It has no monthly payment and no interest, and it is forgiven on a schedule. By contrast, the Maryland Mortgage Program describes its 1st Time Advantage 6000 assistance as a 0% interest deferred second lien that must be repaid when the first mortgage ends, such as through sale or refinance. That state product is deferred but not forgiven over time (see Part 4 of this series on Maryland first time home buyer down payment assistance).
How does the Pathway to Purchase forgiveness schedule work?
According to Prince George's County DHCD, there is no forgiveness in years 1 through 5. Then 10% of the loan is forgiven each year for the next 10 years. If you occupy the home as your primary residence for 15 years, the loan is fully forgiven.
The table below shows what that schedule could look like on a full $50,000 loan. It assumes forgiveness posts at the end of each year. Your recorded loan documents control the exact calculation and timing, so treat this as an illustration, not a payoff statement.
The first five years are the "full balance" zone. Any repayment event during that window may mean the entire amount is due. After year 5, the possible repayment shrinks by about $5,000 per year on a $50,000 loan.
What triggers repayment of the Prince George's County first time home buyer grant?
DHCD lists four events that may require repayment before forgiveness is complete:
- Sale. You sell the home before year 15.
- Transfer. You transfer title to someone else, for example by deeding the home to a relative.
- Refinance. You replace your first mortgage with a new loan, including a cash-out refinance or a rate-and-term refinance.
- Non-occupancy. The home stops being your primary residence, for example if you move out and rent it.
Whether a specific refinance could be approved without repayment, sometimes called subordination, is a question for DHCD and your lender.
What about renting the home out?
Renting the home out generally means it is no longer your primary residence. Under the program's occupancy rule, that can be a repayment trigger. Buyers who think they may relocate for work, including federal employees facing agency changes, should factor this in before using the program.
What happens if I sell for less than I owe?
The program page does not describe how a short sale or a sale with little equity would be handled. Ask DHCD and a real estate attorney before assuming any outcome.
Three examples of how timing changes the outcome
These examples use a $40,000 Pathway to Purchase loan and the published schedule. They are illustrations only.
Example 1: Sale in year 3
A buyer closes in Bowie, gets a job offer in another state, and sells in year 3. No forgiveness has occurred yet, so the full $40,000 may be due from the sale proceeds at settlement. The settlement company would request a payoff from DHCD.
Example 2: Refinance in year 8
A buyer in Clinton refinances after rates fall. By the end of year 8, 30% would be forgiven under the schedule, leaving roughly $28,000. If the refinance triggers repayment, that remaining amount may need to be paid off or rolled into the new loan, if the lender allows it.
Example 3: Stay for 15 years
A buyer in Upper Marlboro keeps the home as a primary residence for 15 years. The full $40,000 is forgiven. At that point, the money effectively worked like a grant.
Should you still use it if you might not stay 15 years?
That is a personal decision, and it depends on your plans, your savings, and your lender's advice. Here is how buyers often think it through:
- No interest and no payment. Even if you repay it in year 3, you used $40,000 or $50,000 for three years at zero cost. That can be the difference between buying now and waiting.
- Equity at sale. If you sell early, the repayment comes out of your proceeds. Whether that leaves you money to walk away with depends on your price, loan balance, and selling costs (see Part 12 of this series on how much it costs to sell a house in Maryland).
- Refinance plans. If you expect to refinance soon, ask how the county loan will be handled before you close.
Donnell, a PMP, walks buyers through a simple risk check: list your likely moves in the next 5, 10, and 15 years, then match each one to the schedule.
Is the forgiven amount taxable?
Forgiven debt can have tax consequences in some situations. Ask a CPA or tax professional before closing.
How to confirm your exact terms
Your Pathway to Purchase terms are set in the documents you sign at settlement, usually a promissory note and a deed of trust recorded against the home. Keep copies. If you ever plan to sell, refinance, or move, request a written payoff or status letter from DHCD first. DHCD lists PathwaytoPurchase@co.pg.md.us and 301-883-5456 for program questions, and its office is at 9200 Basil Court, Suite 306, Largo, MD 20774.
For the full eligibility rules, including the 80% AMI income limit and the $448,000 resale and $485,000 new construction price limits, see Part 1 of this series on the Prince George's County first time home buyer program.
Frequently Asked Questions
Do I have to pay back the Prince George's County first time home buyer grant?
Possibly. Pathway to Purchase is a deferred loan that is fully forgiven only after 15 years of owner occupancy. If you sell, transfer, refinance, or stop living in the home before then, repayment may be due.
When does forgiveness start?
According to Prince George's County DHCD, nothing is forgiven in years 1 through 5. Forgiveness begins in year 6 at 10% per year and finishes after year 15.
Is there a monthly payment on the county loan?
No. The program is a zero-interest deferred loan, so there is no monthly payment and no interest charge. The balance only matters if a repayment event occurs before full forgiveness.
Can I rent out my home and keep the forgiveness?
Generally no. The home must stay your primary residence during the forgiveness period. Renting it out can count as non-occupancy, which is listed as a repayment trigger.
Are there true grants for Prince George's County buyers?
Some employers, lenders, and nonprofits offer grant-style help from time to time, and terms change. Ask an approved lender what is available for your file, and read whether each offer is a grant, a deferred loan, or a forgivable loan.
This article is general information, not legal, tax, or lending advice.
Next Steps
Before you count on assistance money, know exactly when it becomes yours. Donnell Williams Jr., Broker-Owner of DMV Prime Properties, a NACA registered agent, and author of The Complete Guide to Buying a Home, offers a first-time buyer strategy call that lines up your five, ten, and fifteen-year plans with the Pathway to Purchase schedule before you write an offer. That is what the brokerage means by "Educate to Elevate." Call 301.265.3446, email donnell@dmvprimerealty.com, or visit OWNDMV.COM. The office is at 12815 Old Fort Road, Suite 105, Fort Washington, MD 20744.
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