Your Maryland Home Is Under Contract but Has Not Closed

Key takeaways

Under contract is not closed. Until the sale funds, the departing residence's full PITIA stays in your ratio unless a documented rule removes it. (Fannie Mae B3-3.8-05, dated 09/02/2026.)
Agency financing wants evidence the sale will fund, in practice the executed contract plus the closing disclosure or settlement statement. (Fannie Mae B3-3.8-05, dated 09/02/2026.)
If the closings cannot be aligned, carrying both payments and recasting afterward is the most predictable route, and it records no new lien on the departing home. (Fannie Mae B3-3.8-05, dated 09/02/2026.)
Borrowing against the departing home still works and is still taxed on the increase in principal under 12-108(e).
The rental route is generally off the table once the home is committed to a buyer. (Fannie Mae B3-3.8-05, dated 09/02/2026.)
Plan the new home's tax line on the current assessment, because 9-105 withholds the homestead credit after a transfer for consideration.

Program and regulatory figures verified September 25, 2026. Details change; confirm your scenario with us.

By Mike Certo, Cornerstone First Mortgage · NMLS #260555 · Updated September 25, 2026

A signed contract is good news and it is not a closed sale. Underwriting draws that line firmly, and in Maryland the way you bridge the gap has a tax consequence.

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Where underwriting draws the line

A contract is a promise; funding is an event. The departing residence's payment comes out of your debt-to-income ratio when the file can show the sale is done or documented to the point the guideline accepts, and not before.

If your purchase closes before your sale funds, you are qualifying while holding two payments regardless of how solid the contract looks. That is a financing problem with financing answers.

What to have ready

The fully executed contract on the departing home.
The closing disclosure or settlement statement once it exists.
Current statements on the departing mortgage, taxes, insurance and any association dues.
Evidence of reserves, which is usually what carries a file through an overlap.
The current assessment on the home you are buying, not the seller's tax bill.

Your agent handles the contract and its dates. We work on what the money has to do around it.

Which structure fits

Structure	Fit when under contract	Maryland tax note
Carry both, recast after	Strong. Sale proceeds become the recast principal reduction	No new lien, so no recordation tax on the departing home
Borrow against departing equity	Workable. The second is repaid from the sale proceeds	Recordation tax on the increase in principal under 12-108(e)
Keep it and rent it	Generally unavailable once committed to a buyer	n/a

Because the sale is expected to close, the equity route is short-lived by design, which is worth weighing against the recordation tax it triggers. A tax paid on money borrowed for a few weeks is still a tax paid. See the recordation tax page.

The new home's taxes

Under Md. Tax-Property 9-105 the Homestead Tax Credit is unavailable for a taxable year where, during the previous taxable year, the dwelling was transferred for consideration to new ownership. Your purchase is that transfer, so budget on the current assessment and file the application by June 30 for the following taxable year. See the homestead reset page.

If you are buying above the conforming limit

Maryland's 2026 one-unit limit is $832,750 in 19 jurisdictions, $1,249,125 in Montgomery, Prince George's, Frederick and Charles, and $1,209,750 in Calvert. Above the applicable limit, some jumbo investors will not release a departing payment until the sale funds. See the jumbo page, the structures page, and if your home is listed rather than under contract, listed but not sold.

Frequently asked questions

Does a signed contract on my current home remove that payment from my ratio?

Not on its own. Underwriting treats a contract as a promise and funding as the event. The departing residence's full PITIA generally stays in your debt-to-income ratio until the file documents the sale, which in practice means the executed contract plus the closing disclosure or settlement statement.

If I only need the money for a few weeks, is the Maryland recordation tax still charged?

Yes. Md. Tax-Property 12-108(e) attaches the tax when a supplemental instrument is recorded that increases unpaid outstanding principal debt. How long the borrowing lasts does not change that, which is worth weighing against carrying both payments instead.

What should I use for the new home's property taxes when qualifying?

The current assessment. Md. Tax-Property 9-105 withholds the Homestead Tax Credit for a taxable year where the dwelling was transferred for consideration to new ownership in the previous taxable year, so the seller's capped bill does not carry over to you.

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.