Hi Rachel! I am afraid that prices are much higher than 500.00 in this area for a puppy from a reputable breeder. You may want to check local rescue sites for possibilities.
www.petfinder.com is a good start. I think it is a lovely thought to think of your grandmother, but please don't surprise her with a pup, but discuss all the considerations for care in advance. Pups are a lot of work.
Whispersmom is a breeder in Annapolis that is also involved with small dog rescue and may be able to help. Best of luck in your search.