Comparing FHA, Conventional and VA Loans Under Maryland High Closing-Tax Rules
Updated October 2026
In Maryland, the smallest down payment does not necessarily produce the smallest cash-to-close figure. Transfer taxes, recordation taxes, prepaid insurance, and escrow deposits can materially change the comparison among FHA, conventional, and VA financing. Skipjack & Stairs compares those costs separately so a low-down-payment option does not hide a larger settlement requirement.
Start with Maryland's three closing-tax layers
Maryland generally imposes a 0.50% state transfer tax. For a qualifying, certified Maryland first-time homebuyer transaction, the state rate becomes 0.25%, paid entirely by the seller. That benefit does not automatically eliminate county taxes.
County transfer taxes, where imposed, commonly fall around 0.5% to 1.5%, while recordation taxes use local rates often expressed per $500 of taxable consideration or debt. Local exemptions, brackets, and allocation rules matter. The contract also affects who pays charges that may be negotiated.
Have the settlement company itemize each layer. Enter the resulting amounts in the closing cost estimator, rather than applying one statewide percentage to every purchase.
Compare financing costs on the same purchase
| Feature | Conventional | FHA | VA |
|---|---|---|---|
| Low-down-payment option | Some programs allow 3% | Generally 3.5% with qualifying credit | Eligible borrowers may finance with no down payment |
| Mortgage-related insurance | PMI generally applies above 80% loan-to-value | Upfront and annual mortgage insurance | No monthly mortgage insurance |
| Additional upfront charge | Product-dependent | Upfront mortgage insurance premium | Funding fee unless exempt |
For 2026, the baseline conforming limit is $832,750. The FHA floor is $541,287, but the applicable FHA limit depends on county and unit count. Neither figure guarantees borrower eligibility.
VA financing deserves particular attention for eligible households connected to Fort Meade, NSA, Andrews, Pax River, Aberdeen, Fort Detrick, and Bethesda. Review entitlement and funding-fee exemptions through Department of Veterans Affairs Home Loans. Zero down still leaves closing costs unless covered through permitted credits or assistance.
Coordinate assistance with seller credits
The Maryland Department of Housing and Community Development administers MMP options including 1st Time Advantage Direct, 6000, and percentage-based assistance products, along with Flex Loans, HomeAbility, and Maryland SmartBuy 3.0. Availability, repayment terms, and eligibility differ; assistance should not automatically be treated as a grant.
Ask whether your selected mortgage supports the assistance and proposed seller contribution. FHA, conventional, and VA rules treat contributions differently, and credits cannot simply become unrestricted cash back.
Request a personalized comparison showing identical purchase prices, rate-lock assumptions, seller credits, financed fees, and estimated ownership periods.
Editorial Methodology & Primary Sources
Verification date: Not recorded; check the primary source and lender timestamp before relying on an estimate.
Rate comparisons use participating lender feeds, not a whole-market survey or guaranteed offers. Freddie Mac PMMS is a market benchmark, not a personalized quote. Calculator models rely on published regulatory formulas and disclosed assumptions rather than fabricated first-person loan testing.
Monthly principal and interest use the amortization formula P × r / (1 − (1 + r)−n), where r is the monthly note rate and n is the number of payments; at zero interest use P / n. PITI adds monthly property taxes and homeowners insurance; PMI is separate. APR includes applicable finance charges under Regulation Z and is not the note rate used for payments. Compare lender Loan Estimates for actual APR and fees.
- Consumer Financial Protection Bureau (CFPB) — Loan Estimates, APR and borrower disclosures; Regulation Z.
- U.S. Department of Housing and Urban Development (HUD / FHA) — FHA program guidance.
- U.S. Department of Veterans Affairs (VA) — VA loan eligibility and benefits.
- Freddie Mac Primary Mortgage Market Survey (PMMS) — published rate benchmarks.
- U.S. Census state tax collections — state property tax benchmarks; confirm parcel-specific assessments and exemptions with the state revenue department and local assessor.
The payment snapshot uses illustrative annual taxes of 1% of home price, $1,200 insurance and 0.5% PMI below 20% down, not verified local quotes. Other calculators disclose their inputs and assumptions. Published guidance and lender feeds may change independently; confirm current program rules, taxes and offers before a decision.