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Construction Loan Requirements in Maryland
Last updated: October 29, 2026. State rules checked against the primary sources listed at the end of this guide.
To build with a construction loan in Maryland, you generally need a builder registered with the state's Home Builder Registration Unit, a building permit from your county or city under the Maryland Building Performance Standards, county health department septic and well approvals if there's no public water or sewer, extra review for lots in the Critical Area, and a flood-zone check. Your lender adds its own credit, appraisal, and draw requirements.
Here's what each step looks like in Maryland, with links to the state sources.
Key takeaways
- Builder: Home Builder Registration Unit registration for new homes.
- Code: Maryland Building Performance Standards, enforced by counties and cities.
- Site: county septic and well approvals; Critical Area rules near tidal waters.
- Liens: petition in circuit court within 180 days after work is finished.
- Closing: title companies or attorneys; transfer and recordation taxes at recording.
What are the requirements at a glance?
| Requirement | Maryland rule | Where to check |
|---|---|---|
| Builder registration | Home Builder Registration Unit (new homes); MHIC (improvements) | Maryland Attorney General; MHIC |
| Building code and permits | Maryland Building Performance Standards; local amendments | County or city permit office |
| Septic and wells | County health department; BAT promoted in the Critical Area | County health department |
| Critical Area | Within 1,000 feet of tidal waters | Local Critical Area program |
| Flood zone | FEMA flood maps; lender flood rules | FEMA Flood Map Service Center |
| Mechanics' liens | Petition in circuit court within 180 days | Circuit court |
| Closing | Title companies or attorneys | Your settlement agent |
| Lender licensing | Office of Financial Regulation | NMLS Consumer Access |
What do lenders require for a construction loan?
Most construction lenders look for:
- A credit, income, and asset review, much like a regular mortgage
- Enough equity, from cash, land you own, or both. See how land equity works.
- An approved builder with a license or registration, insurance, and references. See builder approval.
- Plans, specifications, and a line-item budget, often with a contingency line
- An "as completed" appraisal of the lot and finished home together
- Title work, a survey, and insurance, including builder's risk during construction
- Reserves for cost overruns, depending on the lender
Requirements vary by lender and loan program. FHA, VA, USDA, and conventional loans each have their own rules.
Does my builder need to be registered in Maryland?
Yes. Maryland requires new home builders to register with the Home Builder Registration Unit of the Attorney General's Office (Md. Code, Bus. Reg. § 4.5-601; Maryland Attorney General, new home builder information). Home improvement work is licensed separately by the Maryland Home Improvement Commission (MHIC). Ask for the builder's registration number before you sign.
Ask your county permit office whether you can pull permits as an owner-builder. Many lenders won't finance an owner-builder and require a registered builder. Read more about owner-builder construction loans.
Which building code applies in Maryland?
State law requires local jurisdictions to enforce the Maryland Building Performance Standards, with some local amendments allowed (Maryland Department of Labor, building codes FAQ). The state's code matrix shows which editions each county and city has adopted (Maryland building code matrix). Your county or city permit office issues permits and inspects.
Do I need septic and well approvals in Maryland?
If there's no public sewer or water, expect your county health department to approve the septic system and well before you build. Maryland's Critical Area is land within 1,000 feet of tidal waters, and the state promotes nitrogen-removing Best Available Technology (BAT) septic units there (MDE, septic systems and BAT). Ask your county whether BAT is required for your lot.
What about the Critical Area and flood zones in Maryland?
Check your lot on the FEMA Flood Map Service Center. If the home sits in a high-risk flood area, the lender will generally require flood insurance. Lots within 1,000 feet of tidal waters fall in the Chesapeake and Atlantic Coastal Bays Critical Area, where local programs limit clearing, impervious surface, and building near the shoreline (Maryland DNR, Critical Area Commission).
How are construction loan closings handled in Maryland?
Maryland closings are commonly handled by title companies or attorneys acting as settlement agents. State and local transfer and recordation taxes are collected when the deed and mortgage are recorded in the county land records. Your settlement agent will itemize them on your Closing Disclosure.
How do mechanics' liens work in Maryland?
In Maryland, a lien claimant must file a petition to establish the lien in the circuit court within 180 days after its work is finished or materials are furnished (Md. Code, Real Prop. § 9-105). Most subcontractors must also give the owner written notice within 120 days, and special rules apply to a single-family home built on the owner's land for the owner's own residence (§ 9-104). Lenders collect lien waivers as each draw is paid.
Are there state homebuyer programs for building in Maryland?
The Maryland Mortgage Program offers homebuyer programs through participating lenders (Maryland Mortgage Program). Ask whether a program can be used with new construction before you plan around one.
How do I check that a lender is licensed in Maryland?
Search the lender and loan officer on NMLS Consumer Access. Maryland's Office of Financial Regulation licenses mortgage lenders, brokers, and loan originators (Maryland Office of Financial Regulation).
What are the steps to build in Maryland?
- Confirm the lot can be built on: access, zoning, flood zone, and septic or sewer.
- Choose a qualified builder and get plans, specs, and a line-item budget.
- Compare lenders and get a Loan Estimate for your project.
- Apply. The lender reviews you, your builder, and the plans, and orders an appraisal.
- Get county health department septic and well approvals (if needed), any Critical Area review, and the building permit.
- Close with your settlement agent and record the deed and mortgage in the county land records.
- Build. The lender pays the builder in draws after inspections. You pay interest on the money drawn so far.
- Pass the final inspection and get a certificate of occupancy.
- The loan converts to your permanent mortgage. See what happens at conversion.
Where can I learn more?
Comparing lenders? Read how to choose a construction-to-permanent lender in Maryland. Building somewhere else? See our construction loan guides by state.
Frequently asked questions
Can I be my own builder in Maryland?
Ask your county permit office. Many lenders won't finance an owner-builder and require a registered builder.
Which building code applies to a new home in Maryland?
Local jurisdictions enforce the Maryland Building Performance Standards with some amendments. The state code matrix lists each county's editions.
Who approves a septic system for a new home in Maryland?
Your county health department. Near tidal waters, ask whether a nitrogen-removing BAT unit is required.
How long does a contractor have to file a lien in Maryland?
A claimant must file a petition in circuit court within 180 days after its work is finished or materials are furnished.
What is the Critical Area in Maryland?
Land within 1,000 feet of tidal waters of the Chesapeake and Atlantic Coastal Bays, where local programs limit clearing and building near the shore.
Sources
- Md. Code, Bus. Reg. § 4.5-601
- Maryland Attorney General, new home builder information
- MHIC
- Maryland Department of Labor, building codes FAQ
- Maryland building code matrix
- MDE, septic systems and BAT
- FEMA Flood Map Service Center
- Maryland DNR, Critical Area Commission
- Md. Code, Real Prop. § 9-105
- § 9-104
- Maryland Mortgage Program
- NMLS Consumer Access
- Maryland Office of Financial Regulation
Ready to build in Maryland?
Tell us about your lot, your builder, and where you are building. Get connected at My Construction Path, and we'll connect you with lenders who offer construction financing in Maryland.
My Construction Path is not a lender and does not make loans or credit decisions. Not all borrowers will qualify. Equal Housing Opportunity. Requirements vary by lender, loan program, and location. This article is for general education and is not a commitment to lend. It is not a quote of rates, payments, or loan terms.