Maryland VA loan glossary
Mike Certo · Cornerstone First Mortgage · NMLS #260555 ·
VA loans and Maryland-specific Veteran programs have a vocabulary of their own. This glossary collects the terms Veterans actually run into, with plain-English definitions and Maryland context where it helps. Bookmark this page.
A
AMI (Area Median Income) — Income benchmark used by the Maryland Mortgage Program (MMP) down payment assistance options to determine eligibility. AMI varies by county; the Baltimore-Washington metro counties run higher than rural areas of the state.
Assumable — A VA loan can be assumed by a qualified buyer (veteran or non-veteran). The original veteran's entitlement stays tied to the loan unless the assuming party is also a veteran substituting their own entitlement. Full guide.
ARM (Adjustable Rate Mortgage) — The VA permits ARMs, but most VA loans are fixed-rate. Less common in the Maryland market.
B
BAH (Basic Allowance for Housing) — Monthly housing stipend paid to active-duty service members. Varies by base, rank, and dependent status. Maryland bases like Fort Meade, Joint Base Andrews, NAS Patuxent River, and Aberdeen each fall in their own housing area. BAH calculator.
Back-end DTI — Total debt obligations (PITI + other monthly debts) as a percentage of gross income. VA guideline: 41%. Some lenders accept higher with strong residual income.
C
Cash-out refi — VA refinance that pulls equity out of the home. VA allows up to 100% LTV cash-out (higher than conventional 80% cap). Funding fee applies (2.15% first use / 3.30% subsequent).
Special tax / assessment district — Special assessment or community development districts in some Maryland master-planned communities. Adds to monthly housing cost, and the VA underwriter includes it in DTI.
Closing costs — Fees paid at closing — typically 2-4% of loan amount. VA caps several. Seller can pay up to 4% in concessions.
Cluster home — Detached or semi-detached home in a planned community with shared common-area maintenance. Common in Maryland retirement communities. VA-eligible if the HOA is approved.
COE (Certificate of Eligibility) — VA-issued document confirming a veteran's eligibility for the VA loan benefit. Free, obtained through VA.gov or via Mike. Required before VA loan can close.
Equitable distribution — Maryland is an equitable-distribution state, not a community property state. In a divorce, marital property is divided fairly rather than automatically split 50/50. This affects how VA loans are titled and how divorce and estate planning interact with the home.
Compensation — VA disability monthly payment based on rating (10%-100%). Federally tax-free in all states.
Conforming loan limit — Maximum loan size for standard VA (or conventional) financing. 2026 MD baseline: $832,750 statewide.
D
Elevation Certificate — A FEMA document showing a home's elevation relative to the base flood elevation. Used to set flood insurance pricing for properties in or near a flood zone, common along the Chesapeake and Eastern Shore.
DD-214 — Discharge document issued at military separation. Used to verify VA loan eligibility + claim other Veteran benefits.
Disability rating (VA) — Percentage rating (0% to 100%, in 10% increments) assigned by the VA based on service-connected disabilities. A 10%+ rating waives the VA funding fee. A 100% permanent-and-total rating in Maryland earns a full property tax exemption on the primary residence.
DPA (Down Payment Assistance) — Maryland programs that provide grants or deferred seconds to help with down payment and closing costs. The main source is the Maryland Mortgage Program (MMP): 1st Time Advantage, Flex, and the $6,000 DPA option with Partner Match. Stacker guide.
DTI (Debt-to-Income ratio) — Total monthly debt divided by gross monthly income. VA guideline: 41% back-end. Front-end (PITI only) typically should be ≤29%.
E
Earnest money deposit (EMD) — Money buyer puts up at offer acceptance to show good faith. Standard MD EMD is 1% of price; 2-3% strengthens VA offers in competitive markets.
Entitlement — Veteran's $0-down VA loan capacity. Currently $144,000 basic + 25% of FHFA conforming limit = roughly $208,000 total entitlement in 2026. Limits the $0-down amount; doesn't cap the loan size for Veterans with full entitlement.
Escrow account — Account where lender holds property tax + insurance funds and pays them when due. Most MD VA loans use escrow.
F
Flood Zone (FEMA SFHA) — A FEMA-mapped Special Flood Hazard Area where flood insurance is generally required for a mortgage. Many Maryland waterfront and low-lying properties on the Bay and Eastern Shore fall in an SFHA.
Maryland Joint Insurance Association — Maryland's insurer of last resort for homes that cannot get standard market coverage. More expensive with more limited coverage, often used for older or coastal-exposed properties.
FHFA limit — Federal Housing Finance Agency conforming loan limit. 2026 baseline is $832,750. High-cost DC-metro counties (Montgomery, Prince George's, Frederick, Charles, Calvert) carry a higher ceiling of $1,249,125.
First use — A veteran's first time using VA loan benefit. Lower funding fee (2.15% at $0 down) vs subsequent use (3.30%).
Front-end DTI — PITI as a percentage of gross income. VA prefers ≤29% but DTI alone doesn't decide approval.
Funding fee — One-time VA fee paid at closing (can be financed). 2.15% first use, 3.30% subsequent at $0 down. Waived for 10%+ disability rating. Calculator.
G
Gross income — Income before taxes. Used for DTI calc.
Gross-up — Treatment of tax-free income (VA disability, BAH, etc.) as higher equivalent taxable income for mortgage qualification. Standard 25% boost. Calculator.
H
Disabled-Veteran property tax exemption — Maryland exempts the primary residence of a Veteran rated 100% permanent and total for a service-connected disability from property tax, and the exemption can carry to a surviving spouse. Full guide.
HOA (Homeowners Association) — Community association charging monthly or annual fees for shared amenities and maintenance. Common in Maryland master-planned communities. Affects the VA DTI calculation.
Flex (MMP) — A Maryland Mortgage Program option that pairs first-mortgage financing with down payment assistance and isn't limited to first-time buyers. Works well stacked with a VA first mortgage.
1st Time Advantage (MMP) — The Maryland Mortgage Program's first-time-buyer track, offering competitive financing plus down payment and closing-cost assistance, including a $6,000 DPA option and Partner Match funds.
I
IRRRL (Interest Rate Reduction Refinance Loan) — VA streamline refi. No income docs, no appraisal, no funding fee if disability waiver. Must pass VA's 36-month recoupment test. Calculator.
Inspection — Buyer-paid home inspection (separate from VA appraisal). Identifies condition issues + bargaining points.
J
Joint VA loan — Two veterans buying together can use combined entitlement. Each contributes their entitlement; combined down-payment requirement scales accordingly.
Jumbo VA — VA loan above the FHFA conforming limit ($832,750 in MD). Vets with full entitlement can finance to ~$4M with select lenders.
L
Land lease — Property where you own the home but lease the land. Rare in MD. VA typically can't finance.
LO (Loan Officer) — Mortgage professional originating loans. Mike is an LO at Cornerstone First Mortgage. NMLS #260555.
LTV (Loan-to-Value ratio) — Loan amount divided by appraised property value. VA allows 100% LTV (and effectively higher with funding fee financed).
Joint Base Andrews — Joint Base Andrews in Prince George's County, home of the 89th Airlift Wing and the aircraft known as Air Force One. A major Maryland duty station and PCS destination. Base hub page.
M
MCC (Mortgage Credit Certificate) — Federal tax credit for portion of mortgage interest paid. MD Housing Authority administers. Can stack with VA + DPA.
MHA (Military Housing Area) — Geographic area used to set BAH rates. Joint Base Andrews falls in the Washington DC MHA; Fort Meade and Aberdeen sit in the Baltimore MHA.
MPR (Minimum Property Requirements) — The VA's property standards. A sound roof, working heat, adequate water and sewer, no major safety issues, and for coastal properties, no standing water and flood-zone compliance.
N
NADL (Native American Direct Loan) — VA loan program for Native veterans on tribal trust land. VA is the direct lender. Full guide.
Net income — Income after taxes. Used for VA residual income calc.
NMLS — Nationwide Multistate Licensing System for mortgage professionals. Mike: NMLS #260555. Cornerstone: NMLS #173855.
O
Occupancy — VA requires primary residence occupancy within 60 days of closing. No exception for second homes or investment property.
Origination fee — Lender fee for processing the loan. VA caps at 1% of loan amount.
P
Partner Match (MMP) — A Maryland Mortgage Program feature that adds matching down payment funds from participating employers, builders, and community partners on top of the base $6,000 DPA, increasing total assistance for eligible buyers.
PCS (Permanent Change of Station) — Military relocation between duty stations. 60-day window from arrival for VA primary-residence occupancy. Ask Mike about PCS-season tactics.
PITI — Principal, Interest, Taxes, Insurance. Total monthly housing payment. Calculator.
Pre-underwriting (TBD) — Full underwriting before a specific property is identified. Strongest pre-approval format; Mike issues TBD letters for MD summer-PCS situations.
Primary residence — VA loan requirement. Must occupy as primary residence within 60 days of closing.
R
Reserves (military) — National Guard + Reserve service. Reservists with 6+ years qualify for VA loan benefit.
Residual income — Net income remaining after PITI + utilities + debts. VA's hidden second qualifying test (separate from DTI). Required minimums by family size + region. Calculator.
Restored entitlement — VA entitlement restored after a previous VA loan is paid off (typically via home sale). Allows reuse for next purchase.
S
Seller concessions — Money seller agrees to pay toward buyer closing costs. VA allows up to 4%.
Subsequent use — Second or later use of VA benefit. Higher funding fee (3.30% at $0 down vs 2.15% first use).
Survivor benefits — Surviving spouse of KIA or service-connected disabled Veteran may be eligible for VA loan + property tax exemptions + Dependency and Indemnity Compensation.
T
TBD (To Be Determined) — Pre-underwriting before property is identified. Strongest pre-approval letter format.
Term — Length of the loan. Standard VA is 30 years; 15-year and 20-year also available.
Tribal trust land — Land held in trust by the federal government for a tribe or individual Native American. Standard VA can't finance; NADL applies.
U
Underwriting — Lender's full review of borrower + property. Verifies income, credit, assets, property.
V
VA appraisal — VA-ordered appraisal verifying property value + MPR compliance. Different from buyer's inspection.
VA Builder ID — Registration number assigned by VA Regional Loan Center to qualified builders. Required for VA construction loans.
VA disability compensation — Monthly tax-free payment based on service-connected disability rating.
VA loan limit — Maximum loan size at full guaranty. 2026 MD baseline: $832,750.
Vested veteran — Veteran who has earned the VA loan benefit through qualifying military service.
W
Named-storm / hurricane deductible — A separate, usually percentage-based deductible that applies to claims from a named tropical storm or hurricane. Common on Maryland coastal and Bay-front homeowners policies. Hurricane and flood guide.
Wind / coastal coverage — Windstorm coverage for homes near the Atlantic and Chesapeake. Some carriers limit or exclude it close to the water, which can push owners toward the Maryland Joint Insurance Association.
Z
Zero-down — Standard VA loan feature. No down payment required.
Term you encountered that's not here? Email Mike and he'll add it — this glossary grows as MD Veterans ask new questions.