Three Ways to Buy Your Next Maryland Home First
Program and regulatory figures verified September 25, 2026. Details change; confirm your scenario with us.
The three structures are the same everywhere. Maryland is the state where one of them carries a tax the other two do not, which moves it down the list more often than elsewhere.
Carry both payments, then recast
You qualify carrying the current mortgage and the new one together, buy the next home, and when the old one sells apply the proceeds to the new loan's principal and ask the servicer to recast. Recasting re-amortizes the remaining balance over the remaining term, lowering the payment without a refinance and without new closing costs.
In Maryland this structure has a specific advantage worth naming: no new lien is recorded against the departing residence, so there is no increase in unpaid outstanding principal debt on that property and nothing for recordation tax to attach to under Md. Tax-Property 12-108(e). The constraint is the ratio, since both full payments count.
Borrow against the equity you already have
A closed-end second or an equity line against the departing residence converts trapped equity into a down payment, repaid from the sale at closing. It works in Maryland, and it costs more here than in most states.
Section 12-108(e) subjects a supplemental instrument to recordation tax to the extent the amount of unpaid outstanding principal debt is increased by it. The refinancing exemption in 12-108(g) reaches only the unpaid principal of the mortgage being refinanced, and only where the refinancing is by the original mortgagor, or that mortgagor and spouse, or the settlor of an inter vivos trust through its trustee.
So the new money is the taxed part. Rates are county-set, so the size of that cost depends on where the departing home sits. Detail on the recordation tax page.
Keep it and rent it
The departing home becomes a rental, which removes the dependency on a sale date and records no new lien. What it does raise is the occupancy question: under 9-105(a)(5)(i)(1) a dwelling qualifies for the Homestead Tax Credit only where it is actually occupied, or expected to be, by the homeowner for more than 6 months of a 12-month period beginning with the date of finality for that taxable year. A tenanted departing home will not meet that.
The financing side changed in September 2026. Fannie Mae B3-3.8-05, dated 09/02/2026 under Announcement SEL-2026-08:
- No leases. Lease agreements are not permitted for any departing residence. Market rent comes from a complete appraisal with market rents, a Form 1007, or market analysis tools with at least three comparable rentals.
- Offset only. Gross rent times 75% less that property's PITIA. Positive offsets that payment; negative goes into the ratio.
- Reserves. Six months on the vacated home under 12 months of property management experience.
How the choice gets made in Maryland
| If this is true | Look first at |
|---|---|
| Income comfortably carries both payments | Carry and recast, which avoids the recordation tax entirely |
| You need the equity and the sale is close | Borrow against it, pricing the recordation tax on the increase |
| The departing home would rent near its payment | Rent it, accepting the homestead credit consequence |
| You are buying in Montgomery, PG, Frederick, Charles or Calvert | The jumbo page, since the limit is higher there |
Start with the Maryland guide, or how qualifying works without a sale.
Frequently asked questions
Which Maryland structure avoids recordation tax on the departing home?
Carrying both payments and recasting after the sale, or keeping the departing home as a rental. Neither records a new lien against that property, so neither increases its unpaid outstanding principal debt under Md. Tax-Property 12-108(e).
Does a mortgage recast cost anything in Maryland?
A recast applies a lump sum to principal and re-amortizes the remaining balance over the remaining term, without a refinance or new closing costs, and it records no new instrument against the departing home. Servicer policies on recasting vary, so confirm the option exists before relying on it.
How much rental income counts when I keep my old Maryland house?
Monthly gross rent times 75%, less that property's PITIA. A positive result offsets the departing residence's payment only and never adds qualifying income; a negative result is added to your debt-to-income ratio. Fannie Mae B3-3.8-05, dated 09/02/2026.
Will renting out my Maryland home affect the Homestead Tax Credit?
Yes. Md. Tax-Property 9-105(a)(5)(i)(1) requires the dwelling to be the homeowner's principal residence and actually occupied, or expected to be occupied, by the homeowner for more than 6 months of the relevant 12-month period. A tenanted departing home does not meet that test.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal, tax, or real estate advice. Maryland recordation tax rates are set by each county and Baltimore City, and the Homestead Tax Credit is administered by the State Department of Assessments and Taxation; your county finance office, your CPA or a Maryland attorney, and your real estate agent each handle their own part. Loans are subject to borrower and property qualification.