The law allows a taxpayer to designate an account they have with a financial institution as a first-time homebuyer savings account. However, although financial institutions may choose to offer such accounts to their customers, the law does not require them to create or offer these types of accounts.

When a first-time homebuyer account is established, the banking institution is required to provide information to the account holder about homebuyer education and housing counseling programs, as well as services provided by nonprofit and government organizations that are certified by the U.S. Department of Housing and Urban Development and available to Maryland residents.

Any Maryland resident who has not owned a home in the last seven years is eligible to create one of these savings accounts. The bank account must be in the first-time home buyers name, or in a joint name, if both people file jointly and are both first-time homebuyers. Currently, family members are not allowed to open accounts for the benefit of a first-time homebuyer, however, family members can contribute money to the buyer in their first-time homebuyer savings account.

A related measure state legislators are introducing this year involves expanding on the state’s first-time homebuyer savings accounts. When first passed in 2021, several compromises were made to the program’s structure to win approval. Unfortunately, the changes resulted in making the accounts less attractive to first-time buyers.

Working with the original bill sponsor, Realtors hope to allow family members to open accounts on behalf of a first-time buyer to maximize their savings timelines and gain wider adoption. This is one bill to watch in the 2024 legislative session.