Mortgage Guide for Maryland

Property Tax Near the National Median

Maryland’s effective property tax rate of approximately 1.09% is close to the national median of roughly 1.1% . On a $415,000 home, that translates to approximately $4,524 per year, or $377 per month added to your mortgage payment through escrow. While the statewide average is moderate, rates vary considerably across Maryland’s 23 counties and Baltimore City. Howard County and Montgomery County carry some of the higher effective rates in the state, while rural counties on the Eastern Shore and in Western Maryland tend to be lower . Maryland assesses property at a percentage of full cash value and uses a triennial reassessment cycle, reassessing roughly one-third of all properties each year. When lenders calculate your debt-to-income ratio, the full property tax obligation counts against your qualifying income, so your specific county rate affects how much house you can afford.

Transfer Tax and Recordation Tax: A Two-Part Closing Cost

Maryland has a more complex transfer cost structure than most states. The state imposes two separate charges on real estate transactions: a transfer tax and a recordation tax. The state transfer tax is 0.5% of the sale price. The recordation tax is set at the county level and is typically $7.00 per $1,000 of consideration in most counties (0.70%), though Baltimore City and some counties charge different rates . On a $415,000 home, the combined state transfer tax and typical county recordation tax would total approximately $4,980, split between buyer and seller according to local custom. Some counties impose additional surcharges on top of these base rates. First-time Maryland homebuyers may qualify for a partial exemption from the transfer tax on the first $300,000 of the purchase price, which can reduce closing costs by up to $1,500 . For a complete overview of how transfer-related charges affect your settlement, see the guide on transfer taxes and recording fees.

High-Cost Counties and Conforming Loan Limits

Maryland’s central corridor benefits from elevated conforming loan limits driven by the Washington, D.C. metropolitan area. While the baseline conforming limit is $806,500 for a single-unit property, counties within the Washington-Arlington-Alexandria MSA carry limits at or near the national ceiling of $1,149,825 . This includes Montgomery County, Prince George’s County, Howard County, Anne Arundel County, Frederick County, Calvert County, Charles County, and St. Mary’s County. FHA limits in these counties are also elevated above the national floor of $524,225 . For buyers in these areas, the higher limits mean conventional financing remains available on loans that would otherwise require jumbo products, which typically carry stricter qualification standards. Buyers on the Eastern Shore, in Western Maryland, and in some Baltimore-area counties outside the DC MSA should plan around the baseline conforming limit. The Baltimore-Columbia-Towson MSA may also carry modestly elevated limits .

The D.C. Suburb Effect on Maryland Markets

Maryland’s mortgage landscape is heavily influenced by the federal government and the defense, technology, and biotech industries concentrated in the D.C. corridor. Montgomery County and Prince George’s County, which border D.C. directly, have median home prices well above the statewide average. Bethesda, Chevy Chase, Potomac, and other Montgomery County communities regularly see median prices above $700,000 . Howard County, anchored by Columbia, carries medians near $500,000 to $550,000 . By contrast, Allegany County and Garrett County in Western Maryland and several Eastern Shore counties have medians below $250,000. This geographic dispersion means the conforming limit structure, affordability calculations, and program eligibility thresholds produce very different outcomes depending on where in the state you purchase.

Maryland Mortgage Program and DHCD Assistance

The Maryland Department of Housing and Community Development (DHCD) administers the Maryland Mortgage Program (MMP), the state’s primary homeownership financing vehicle. MMP offers competitive fixed-rate first mortgages through approved lenders statewide, available as conventional, FHA, and VA loan products. The program pairs with several down payment assistance options, including the 1st Time Advantage program (up to $6,000) and SmartBuy, which helps borrowers with outstanding student loan debt by providing funds to pay down or pay off education loans at closing . Most MMP programs require income below area-specific limits, a minimum credit score (typically 640), and completion of a homebuyer education course. Because income limits are adjusted by area, buyers in Montgomery and Howard counties may qualify at higher income thresholds than those in lower-cost parts of the state.

Insurance Costs Are Among the Lowest Nationally

Maryland’s homeowners insurance rate of approximately 0.25% of home value is well below the national average. On a $415,000 home, that translates to roughly $1,038 per year, or $86 per month. Maryland does not face the hurricane, tornado, or wildfire exposure that drives insurance costs significantly higher in Gulf Coast, Plains, and Western states. However, properties in low-lying areas along the Chesapeake Bay, its tributaries, and the Atlantic coast in Worcester County may fall within FEMA-designated Special Flood Hazard Areas, requiring separate flood insurance. Flood insurance premiums vary based on flood zone classification, elevation, and coverage amount and can add $500 to $3,000 or more per year . Buyers considering waterfront or tidewater properties should factor flood insurance into their affordability calculations, as lenders require proof of coverage before closing on properties in designated zones.

What This Means for Your Monthly Payment

On a $415,000 Maryland home with 10% down ($373,500 loan) at a 6.5% interest rate, estimated monthly costs break down as follows: principal and interest of approximately $2,361, property tax escrow of approximately $377, homeowners insurance of approximately $86, and PMI of approximately $156 (assuming 0.5% PMI rate). The total estimated monthly payment is approximately $2,980. Maryland’s moderate property tax rate and low insurance costs keep the non-principal portion of the payment relatively contained compared to high-tax states like New Jersey or Illinois. However, buyers in Montgomery County purchasing at the county median near $700,000 would face a total monthly payment closer to $5,000, while buyers in Western Maryland or the Eastern Shore purchasing at $250,000 would pay significantly less. At the $2,980 level, a household income of roughly $92,000 would be needed to maintain a 39% DTI ratio before accounting for other debts. PMI rates vary by credit score, loan-to-value ratio, and insurer, so your actual cost may differ from this estimate.