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DSCR Loans in Maryland
Maryland is really two DSCR markets in one small state: Baltimore rowhouse cash flow with some of the best gross ratios in the mid-Atlantic, and the DC-suburb appreciation belt where the same math barely clears 1.0. Neither play is wrong — but they underwrite completely differently, and the state adds its own quirks: ground rent, county-by-county rent caps, and closing costs that deserve a line of their own.
Two plays, two underwrites
The Baltimore City rowhouse is the classic cash-flow asset — purchase prices low relative to rents produce gross ratios most East Coast markets can't touch. The honest version of that pitch includes the other side: block-by-block variability, real vacancy and turnover risk, and operating costs (licensing, lead compliance, older-stock maintenance) that eat naive pro-formas. The DC-suburb belt — Montgomery, Prince George's, Howard — is the opposite bet: much tighter ratios, often needing bigger down payments or an interest-only structure to pencil, with price points that can push into jumbo territory, backed by deep tenant demand and appreciation. Pick the bet first; the loan structure follows.
The Maryland-specific math
- Property taxes are moderate — except in the city. Effective rates run about 1.0–1.1% statewide, but Baltimore City's rate is roughly double most counties. Inside city limits, the tax line matters as much to the ratio as it does in a high-tax state. Run both scenarios in the calculator.
- Transaction costs are real. Combined transfer and recordation taxes are among the higher closing costs on the East Coast and vary by county — budget them on entry and exit, especially on shorter holds.
- Ground rent on older Baltimore rowhouses. Many sit on legacy residential ground leases: you own the house but pay a small annual ground rent unless you redeem it. Lenders and title companies deal with this routinely — but know before the title report surprises you.
- Licensing is an operating step, not paperwork. Baltimore City requires rental licensing, pre-1978 stock needs lead-paint certification, and several counties run their own registration programs.
Rent rules, county by county
Maryland rent regulation is local. Montgomery County adopted rent stabilization that ties annual increases to CPI with a cap in the mid-single digits; Prince George's County has capped increases; Takoma Park has long-standing rent control. Baltimore City itself has no rent cap. Lenders underwrite today's rent either way, but your growth assumptions — and your exit buyer's — depend on which county the address sits in, so read the local rules before trusting a pro-forma.
Underwriting the rowhouse honestly
A Baltimore gross ratio of 1.4+ is common enough to look easy on paper. The deals that actually perform are the ones underwritten with real vacancy and collection assumptions, a maintenance budget sized to century-old stock, and the licensing and lead-certification costs already in the numbers. If the deal still clears comfortably after that haircut, it's genuinely one of the better cash-flow plays on the East Coast — and if it only works at zero vacancy, it doesn't work.
Frequently asked questions
Will ground rent kill my Baltimore deal?
Almost never — lenders and title companies handle legacy ground leases routinely. Just confirm the annual amount and whether redemption makes sense, and put it in your numbers before closing.
Is Baltimore City under rent control?
No — Baltimore City has no rent cap. The capped jurisdictions are in the DC suburbs: Montgomery County (CPI-tied stabilization), Prince George's County, and Takoma Park.
Why do my Maryland closing costs look high?
Transfer plus recordation taxes — they're among the higher combined closing costs on the East Coast and vary by county. Budget them on both purchase and sale.