FHA Cash-Out Refinance Recordation Costs in Maryland, D.C. and Virginia

The Quick Read: The government charge for recording your new loan comes from state and local law. Neither FHA nor your lender sets it. In Maryland and D.C., the tax generally lands on the new money (the cash you take out plus any costs you finance) rather than on the whole balance. Virginia works differently enough that the settlement agent’s figure is the one to trust. Your equity, capped at 80% of the home’s appraised value, decides how much cash there is to tax.

The Short Version

• Recordation charges are government fees, so they do not vary by lender. A gap between two quotes usually means different assumptions, not a better deal.
• On a cash-out refinance, the bigger the cash-out, the bigger the taxable slice in jurisdictions that tax only the increase.
• Maryland sets rates by county. D.C. has its own rules. Virginia layers state and local charges.
• Some of these costs can be financed, but only inside the 80% leverage cap.
• Program figures here are subject to lender guidelines and full file review. Nothing here is a commitment to lend.

Key Terms Defined

Recording fee: a flat charge to file and index your loan documents with the local land records office. It depends on the document, not the loan size.

Recordation tax: a government tax on recording a new loan, usually based on the loan amount. Some states call it by this name, and others fold it into other labels.

Transfer tax: a government charge tied to a change in ownership or, on some forms, a loan amount. On a refinance, ownership does not change, so any tax here is loan-based.

Deed of trust: the document that pledges your home as security for the loan. In this region, it is the instrument that gets recorded.

Settlement agent: the title company or attorney who closes the loan, collects the taxes and fees, and records the documents.

Adjusted value: the appraised value used to measure how much you can borrow against the home.

What Are You Actually Paying For?

Think of two separate line items that people lump together. The recording fee pays a clerk to file your paperwork. The recordation tax is a levy the government charges because a new loan is being recorded.

A cash-out refinance replaces your current mortgage with a new, larger one and hands you the difference in cash. The new deed of trust must be recorded, and that triggers both charges. The recording fee is minor. The tax is the number that can surprise you.

Here is where the program matters. With the FHA cash-out refinance program, the loan reaches up to 80% of the home’s value. That is a lower ceiling than the 96.5% an FHA purchase can reach. Across the wholesale programs Lendmire places files with, the home must also have been owned and occupied as your primary residence for 12 months before the case number is assigned. A bigger loan against a more expensive home means a bigger face amount on the deed of trust, and tax rules key off that face amount or off the increase.

How the Bill Gets Built, Step by Step

1. Appraisal sets the value. The appraised value drives your maximum loan, and the maximum loan drives the face amount of the new deed of trust.

2. Payoff statements fix the old balance. The lender confirms what you owe on the existing mortgage. This number matters twice: it is how much of the new loan goes to the old lender, and in several jurisdictions it is the amount exempt from tax.

3. The new loan is sized. Existing liens that stay on the home count toward the 80% cap. A second mortgage you keep uses up room.

4. The settlement agent computes the tax. The agent applies your jurisdiction’s rule to the new loan amount, the old balance and any exemption paperwork.

5. Taxes and fees come off the closing math. Whatever you owe is paid in cash, rolled into the loan within the cap, or deducted from your proceeds.

Picture a homeowner whose current balance is about half of the appraised value. The new loan reaches 80%. The increase is roughly 30% of the home’s value. In a “tax the increase” jurisdiction, that slice, plus any costs you finance, is the base. In a “tax the whole loan” jurisdiction, the base is the full 80%. Same borrower, same loan, very different tax line. That is the whole story of this topic in one paragraph.

Maryland, D.C. and Virginia Side by Side

This table shows general patterns, not a quote. The settlement agent confirms the real number for your file.

Maryland

Maryland’s recordation tax sits in the state’s tax code, and counties set the rates. On a refinance, the tax generally applies to principal above what remains on the original debt. The Maryland refinance exemption covers a new loan up to the unpaid principal, when the borrower is the original mortgagor. It is measured against the current balance, not the original loan amount.

Some counties ask for a refinance affidavit attached to the deed of trust. Howard County is one example. Anne Arundel is another county that publishes its own recordation rate. The point: the same loan can carry a different tax depending on which county line the home sits behind.

Absent a contrary agreement, the borrower pays this tax on a deed of trust.

District of Columbia

D.C. ties its refinance treatment to its recordation statute. The D.C. Office of Tax and Revenue’s guidance on refinances cites § 42-1103(a)(3) and says the tax rate applies to new principal above the existing balance, to the extent tax was already paid or the debt was exempt. Later guidance from the same office refined that, and it says the refinance must go to the same borrower and be secured by the same property.

Residential refinances may be treated differently from commercial ones. The details depend on the specific transaction, so ask the settlement agent for the actual treatment on your file.

Virginia

Virginia’s recordation tax on deeds of trust comes from Title 58.1, Chapter 8 of the Virginia Code. The refinance rules have changed over time, and older advice about a same-lender exemption circulates online. Do not rely on it. Let the settlement agent compute the current figure.

Local add-ons exist too. Richmond, for example, charges a city recordation tax equal to one-third of the state tax. Your locality may differ.

Where the General Rule Breaks

The tidy rule is “only the new money gets taxed.” Here is where it stops being tidy.

• A change in borrowers. In D.C., the same-borrower, same-property test decides whether the refinance treatment applies. Add or remove a borrower, or change what secures the loan, and the exemption can fall away.
• The “original mortgagor” test in Maryland. If you took title by deed or transfer, ask early whether you still qualify.
• Tax that was never paid on the old balance. In D.C., the existing balance is exempt only to the extent tax was previously paid or the debt was exempt. Unpaid tax on the old loan can show up at your refinance.
• A loan that outruns the value. In Maryland, the part of a refinance that exceeds the old debt can be taxed. Cash-out loans live in this territory by design.
• Modifications treated as refinances. In D.C., an amendment or restatement of a security instrument can be treated as a refinance of the entire debt, unless it is a supplemental deed.
• Remaining liens. A second mortgage you keep counts toward the 80% cap. It does not change the tax rule, but it shrinks your cash.
• Different loan types. An FHA Streamline refinances an existing FHA loan with no appraisal. It is a separate transaction with separate rules. This article is about cash-out only.
• Occupancy. Cash-out is for a principal residence. A second home or rental is a different conversation.

Can You Finance the Tax?

Often yes, within limits. Costs rolled into the loan raise the balance, and the balance must still fit under the leverage cap. HUD’s cash-out Mortgagee Letter cut the maximum loan-to-value on FHA cash-out refinances from 85% to 80% of the adjusted value, citing risk to the FHA insurance fund. That means roughly 20% equity has to stay in the home.

Practically, three things compete for the same equity:

• the cash you want in hand,
• the costs you finance, and
• the upfront FHA mortgage insurance premium, which is a percentage of the base loan and is typically financed.

Every dollar financed for one purpose is a dollar of cash-out you do not get. Net proceeds equal the new loan minus the payoff, minus the costs. If you need a specific amount of cash, tell your loan officer up front so the file is sized to land there after costs.

Financing costs also raises the balance you pay interest on over time, and the annual mortgage insurance premium (between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV) follows the balance up. The monthly budget moves with the new loan size. On a thirty-year loan above 90% LTV, that annual premium lasts the term. At or below 90%, it ends after eleven years. A cash-out at 80% falls in the second group. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.

Where It Shows Up on Your Loan Estimate

On the Loan Estimate and Closing Disclosure, these charges appear in the “Other Costs” section, in a block titled “Taxes and Other Government Fees.” Regulation Z’s rule on the Loan Estimate draws a functional line. Fees set by document type or page count are recording fees. Government charges based on the loan amount or price are disclosed as transfer taxes, whatever the state calls them.

So a tax your state labels “recordation tax” can land on the transfer-tax line. Another settlement agent might map it differently. If two estimates show different labels for similar dollars, ask about the mapping before assuming one is wrong.

How to Estimate It Before You Apply

1. Write down your current balance and a realistic home value.

2. Work out the 80% ceiling and subtract your balance. That gap is the most cash-out room before costs.

3. Decide how much cash you actually need. Taking less lowers the taxable slice where only new money is taxed.

4. Ask the settlement agent which rule applies to your jurisdiction and county, and whether you qualify for the exemption.

5. Collect the prior loan’s instrument information, since some jurisdictions ask you to reference it.

6. Compare estimates line by line. A lender-to-lender difference on this line deserves a question, not a conclusion.

Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.

Weighing Your Next Step

If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches. A home equity line is another route, and Lendmire’s piece HELOC Recordation and Transfer Costs in Maryland, D.C. and Virginia shows how the fee picture changes with that product.

For your own numbers, request a scenario review with Lendmire.

About Lendmire

Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

For the program’s current guidelines, see FHA loan programs.

References

1. Maryland Tax-Property § 12-108 (refinance exemptions)

2. D.C. Office of Tax and Revenue, refinance tax guidance

3. Code of Virginia, Title 58.1, Chapter 8

4. HUD cash-out Mortgagee Letter (80% LTV/CLTV)

5. CFPB Regulation Z § 1026.37 (Loan Estimate content)