Two Income Taxes, One Thin Return: How Maryland Owners Still Qualify
Maryland stacks a county income tax on top of the state tax, so owners deduct hard and file low. We show how Montgomery, Prince George’s, and Baltimore-area business owners qualify on deposits instead.
A Maryland business owner pays state tax and a county tax on the same dollar, so the return is built to shrink, and lenders who read only the return read the smallest number you have.
A Maryland self-employed mortgage is a home loan that qualifies business owners on bank statements, 1099s, or a CPA P&L instead of tax returns. It is built for the federal subcontractor in Rockville, the home-improvement company in Silver Spring, the Columbia consultant, and the Annapolis marine trade. Maryland taxes income twice, once for the state and once for your county, so owners write off every dollar they can. That is smart tax work and bad mortgage paperwork. The JD.Mortgage Team at PRMG fixes that with deposit-based qualifying from 620 FICO (Non-Prime) and 660 FICO (Expanded Prime). 25+ years, 3,100+ closed loans, Scotsman Guide Top Originator 2026. Lending in 49 states. New York excluded.
Last updated: September 24, 2026
Maryland Self-Employed Mortgage: The Short Answer
The short version: in Maryland, a self-employed mortgage replaces the tax return with proof of cash flow. That proof can be 12 or 24 months of bank statements, 1099 forms, or a CPA P&L. The floor is a 620 credit score and 2 years on your own.
As of Q3 2026 (September 2026): Credit scores start at 620 (Non-Prime, 75% LTV, 43% DTI) and 660 (Expanded Prime, 80% LTV, 50% DTI) (PRMG Non-QM Income Qualifying Product Profile, 09/17/2026). Loan-to-value reaches 89.99% at a 740 score with a 45% DTI (PRMG Non-QM Income Qualifying Product Profile, 09/17/2026). You need 2 years self-employed, and personal bank statements count 100% of deposits (PRMG Non-QM Income Qualifying Product Profile, 09/17/2026). The 2026 conforming loan limit in Maryland is $832,750 in most counties, up to $1,249,125 in Charles, Frederick, Montgomery, and Prince George’s counties (FHFA 2026 conforming loan limits).
Who Uses Self-Employed Loans in Maryland
Federal subcontractors along the I-270 corridor
Rockville, Gaithersburg, and Bethesda are full of small firms that sub to larger federal contractors. Owners often run an S-corp and pay themselves a small salary. The rest comes out as distributions and retained cash. We use business bank statements with the 50% expense factor, which picks up money that never shows on the owner’s W-2. You need at least 25% ownership.
Home-improvement and trade companies in Prince George’s and Montgomery
Older housing stock in the DC suburbs keeps roofers, remodelers, and HVAC firms busy. They carry trucks, tools, and crews, so their write-offs are big. Business deposits tell the real story. If your CPA prepares a 12-month P&L, that works too, as long as deposits land within 35% of the P&L revenue.
Consultants and 1099 professionals in Columbia and Annapolis
Health IT, cybersecurity, and policy consultants in Howard and Anne Arundel counties are often paid on a 1099. The 1099 path uses 100% of gross 1099 income plus YTD, averaged, with an IRS transcript.
Chesapeake Bay seasonal operators
Marine repair shops, watermen, and Eastern Shore tourism businesses earn most of their year from spring to fall. We may ask for 24 months of statements so the slow winter months average out instead of sinking the file. If the trade has been steady for 2 years, we can build around the season.
Owners who want equity, not a new house
Plenty of Maryland owners already have a home and a low first-mortgage rate. They want cash for equipment or a second location without refinancing. For them, our Maryland HELOC page is the better starting point. If you do want to refinance, the same bank statement and 1099 methods apply to a self-employed refinance. The documents are the same. Only the goal changes.
Bank Statements, 1099s, or a P&L: Which One Reads Your Income
Match the document to the way money reaches you. Steady deposits point to bank statements. Client 1099s point to the 1099 path. Clean books kept by a CPA point to the P&L.
| If this sounds like you | Start here | Score floor |
|---|---|---|
| Money lands in your account every week | Bank statements | 620 / 660 |
| Clients send you 1099s | 1099 income | 620 / 660 |
| A CPA already keeps your books | CPA P&L | 660 with 2 months of statements |
| Large savings, uneven income | Asset utilization | 660 |
Deep dives: bank statement loans, 1099 loans, P&L loans, asset utilization. Buying a rental? DSCR loans qualify on the rent.
Not sure which path reads your Maryland income best? We run every path you qualify for and show you the strongest number.
See What I Qualify ForMaryland’s County Piggyback Tax and Why Owners File Low
Maryland is one of the few states where every county and Baltimore City charges its own income tax, collected on the same state return. People call it the piggyback tax. The Comptroller’s 2026 Withholding Tax Facts list the county rates.
| County | 2026 local income tax rate |
|---|---|
| Montgomery | 3.20% |
| Prince George’s | 3.20% |
| Howard | 3.20% |
| Calvert | 3.20% |
| Baltimore City | 3.20% |
| Charles | 3.03% |
| Frederick | Tiered, 2.25% to 3.20% |
| Anne Arundel | Tiered, 2.70% to 3.20% |
| Worcester | 2.25% |
The state layer grew too. The Comptroller’s 2025 legislative tax alert says Maryland added a 6.25% bracket and a 6.50% bracket for high earners, plus a 2% tax on net capital gains when federal AGI tops $350,000. The same law lets counties charge up to 3.30% starting in tax year 2026.
Put those together and a Montgomery County owner can face a combined state and county rate near 10% on top of federal and self-employment tax. So the CPA takes every deduction the law allows. Vehicles, depreciation, a home office, retirement contributions. The return goes down. Your income did not. A lender that averages two of those returns will lend you far less than your business supports.
What we count instead
- Business bank statements: 12 or 24 months of deposits x 50% fixed expense factor
- Personal bank statements: 100% of deposits
- 1099 income: 100% of gross 1099 plus YTD, averaged, with an IRS transcript
- CPA, EA, or CTEC P&L: 12 months, with deposits within 35% of P&L revenue
None of these methods look at your county tax bill or your depreciation schedule. See how bank statement loans work in full.
A Rockville Example: The Remodeling Company Owner
Tax return view (example)
- Net business income after deductions: $78,000 a year
- Monthly income: $6,500
- Example housing payment: $4,700
- Other monthly debts: $1,100
- DTI = $5,800 / $6,500 = 89.23% (declined)
Business bank statement view (example)
- Average monthly business deposits: $26,000
- Qualifying income: $26,000 x 50% = $13,000 a month
- Example housing payment: $4,700
- Other monthly debts: $1,100
- DTI = $5,800 / $13,000 = 44.62% (fits under 50%)
This owner runs a four-person remodeling crew out of Rockville and owns 100% of the company. Depreciation on two trucks, a home office, and Montgomery County’s 3.20% local tax push the return down to $78,000. Twelve months of business deposits average $26,000. At 50%, that is $13,000 a month, and the DTI lands at 44.62%, inside the 50% Expanded Prime cap at a 660 or higher score.
Checklist: Maryland Self-Employed Loan Basics
| Checklist item | Standard |
|---|---|
| Proof of business | 2 years self-employed, business in place 2 years |
| Minimum score | 620 (75% LTV) or 660 (80% LTV) |
| Top loan-to-value | 89.99% at 740 on a primary home |
| Maximum loan | $3,500,000 at 70% LTV and a 700 score |
| Reserves | 3 months (Non-Prime) to 6 months (Expanded Prime) |
| Occupancy | Primary, second home, or investment |
Figures: PRMG Non-QM Income Qualifying Product Profile, 09/17/2026.
Buying in Maryland: DC-Suburb Limits, Transfer Tax, and Recordation
FHFA’s 2026 one-unit conforming limit is $1,249,125 in Charles, Frederick, Montgomery, and Prince George’s counties, and $1,209,750 in Calvert County. The rest of Maryland, including Baltimore City, Howard, and Anne Arundel, is at the $832,750 baseline.
Our self-employed loans are not tied to those numbers. They run from $100,000 to $3,500,000, with the top amount at 70% LTV and a 700 score. In Bethesda or Potomac, where prices pass the conforming line, that matters.
Maryland closing costs run high because of transfer and recordation taxes. The state transfer tax is 0.5% of the price under Tax-Property § 13-203. For a qualifying first-time Maryland homebuyer buying a primary home, the rate drops to 0.25% and the seller pays all of it. Each county adds its own recordation tax and often its own transfer tax, and those rates vary a lot county to county. Plan your cash to close around your county’s numbers.
Two more notes. Condos are common in Silver Spring, Rockville, and Bethesda. Warrantable condos reach 89.99% LTV at 740 and non-warrantable condos cap at 80%. In Frederick and Carroll horse and farm country, our cap is 15 acres for a home and 5 for an investment, and a property that is a working farm is not eligible.
Maryland Self-Employed Mortgage Myths, Corrected
❌ Myth: “Houses in Montgomery County cost too much. A self-employed buyer needs a jumbo loan with full tax returns.”
✅ Fact: The 2026 conforming limit in Montgomery County is $1,249,125. And our bank statement loans go from $100,000 to $3,500,000 without tax returns. The $3.5 million top needs 70% LTV and a 700 score.
❌ Myth: “Self-employed loans need 25% down.”
✅ Fact: At a 660 score, Expanded Prime goes to 80% loan-to-value, and a 740 score reaches 89.99% on a primary home. Down payment follows your score and file, not your job title.
❌ Myth: “I have to amend my taxes to show more income.”
✅ Fact: No. These programs never read your tax return. Amending to look bigger usually costs you money for nothing.
Turned down in Maryland because of your tax return? Send us your statements. We tell you what they support before you make an offer.
Run My NumbersMaryland Self-Employed Mortgage Frequently Asked Questions
Can I get a mortgage if I’m self employed in Maryland?
Yes. We qualify Maryland business owners on 12 or 24 months of bank statements, gross 1099 income, or a CPA-prepared P&L. The minimum score is 620 for Non-Prime (75% LTV, 43% DTI) and 660 for Expanded Prime (80% LTV, 50% DTI). Two years self-employed is standard.
Does Maryland’s county income tax affect how much house I can afford?
Not on a bank statement loan. The county tax lowers the net income on your return, but we do not qualify you on the return. Business statements use deposits times a fixed 50% expense factor. Personal statements use 100% of deposits. Your county rate never enters that math.
What is the 2026 loan limit in Prince George’s County?
The 2026 one-unit conforming limit in Prince George’s County is $1,249,125, per FHFA. Montgomery, Charles, and Frederick share it, and Calvert is $1,209,750. The rest of Maryland is at $832,750. Our self-employed loans are not bound by those limits and run from $100,000 up to $3,500,000.
Do first-time buyers in Maryland pay transfer tax?
A qualifying first-time Maryland homebuyer buying a primary home gets a lower state transfer tax, 0.25% instead of 0.5%, and the seller pays all of it under Tax-Property 13-203. County recordation and transfer taxes still apply and vary by county.
Do Maryland lenders count 1099 income without tax returns?
We do. We count 100% of your gross 1099 income plus year-to-date earnings, averaged over at least 12 months, and confirm it with an IRS transcript. There is no expense cut taken off the top of 1099 income.
How many months of bank statements do I need?
Twelve months is the standard. If your income is seasonal, we use 24 months so a slow stretch is averaged against your busy months. Personal and business statements cannot be mixed in one calculation.
How long do I need to be self-employed to qualify?
Two years is the rule, and the business must exist for 2 years. With 1 to 2 years, we can still look at the file if you worked 2 years in the same line of work before going out on your own.
Can I buy a second home or rental with bank statements?
Yes. Primary homes, second homes, and investment properties all qualify. Second homes must be one unit. For a rental, a DSCR loan can qualify on the rent alone and keep your personal income out of the file.
Related Pages
About the Author
J.D. Peck is an Area Manager and Mortgage Loan Originator (NMLS #314883) with the JD.Mortgage Team at Paramount Residential Mortgage Group, Inc. (NMLS #75243), based in Colorado Springs. 25+ years, 3,100+ closed loans, Scotsman Guide Top Originator 2026. Lending in 49 states. New York excluded.
Last updated: September 24, 2026. Self-employed program facts sourced from the PRMG Non-QM Income Qualifying Product Profile, 09/17/2026. Loan limits from FHFA 2026 conforming loan limit values. Maryland tax and property facts from official Maryland state sources linked above.
Find Out What Your Maryland Deposits Qualify You For
Send your statements, 1099s, or P&L. We run every path that fits and show you the loan amount, down payment, and program before you write an offer.
More for Maryland: Maryland VA loans · Maryland HELOC
Source: JD.Mortgage Team at PRMG, Maryland Self-Employed Mortgage: Bank Statement, 1099, and P&L Loans, updated September 2026, https://jd.mortgage/maryland-self-employed-mortgage/
What are you looking to do?
No SSN required. No credit pull. Takes about 2 minutes.