How To Sell Your House in Maryland with an Underwater Mortgage
Yes, you can sell houses in underwater mortgage situations — owing more than your home is worth doesn’t mean you’re stuck. Maryland’s rate of serious underwater mortgages climbed from 2.6% to 3.7% year-over-year, one of the sharpest increases of any state in the country, and nationally roughly 3% of mortgaged properties are now underwater by 25% or more. If you’re asking can I sell my house if I owe more than it’s worth, DBC Home Buyers can walk you through what selling with negative equity actually looks like in Maryland.
How To Sell Your House in Maryland with an Underwater Mortgage
Yes, you can sell houses in underwater mortgage situations — owing more than your home is worth doesn’t mean you’re stuck. Maryland’s rate of serious underwater mortgages climbed from 2.6% to 3.7% year-over-year, one of the sharpest increases of any state in the country, and nationally roughly 3% of mortgaged properties are now underwater by 25% or more. If you’re asking can I sell my house if I owe more than it’s worth, DBC Home Buyers can walk you through what selling with negative equity actually looks like in Maryland.
What Happens If You Owe More on Your Mortgage Than Your House Is Worth
Negative equity is more common right now than it’s been in years. Nationally, ICE Mortgage Technology reported more than 1.1 million underwater borrowers by the end of 2025. The highest level since early 2018 and Cotality’s Q4 2025 data showed a 21% year-over-year jump in underwater properties. In Maryland specifically, the rise has been among the steepest in the country. When you’re underwater, you generally have a few real paths forward: keep paying and wait for equity to recover, bring cash to the closing table to cover the gap, pursue a short sale with your lender’s approval, offer a deed in lieu of foreclosure, or sell to a cash buyer who can help navigate the situation directly.
Maryland has a specific legal wrinkle worth understanding: lenders here can pursue a deficiency judgment after both a short sale and a foreclosure, meaning if your home sells for less than what’s owed, the lender may still be able to sue you personally for the difference. Under Maryland Rule 14-216, a lender generally has three years from the ratification of the foreclosure auditor’s report to file that motion. On top of that, the federal Mortgage Forgiveness Debt Relief Act exclusion expired on January 1, 2026, which means forgiven mortgage debt from a short sale or deed in lieu may now be taxable as ordinary income unless you qualify for an insolvency or bankruptcy exception. A short sale also typically drops your credit score 100 to 150 points, better than foreclosure’s 100 to 300 point hit, but still a real consequence that lasts up to seven years on your credit report.
Most underwater homeowners assume a short sale through a traditional listing is the only path.
In practice, that route usually looks like this:
- You have to get your lender's approval before a short sale can even move forward, a process that can take weeks to months depending on the lender
- The home still has to go through a traditional listing process, with an agent, showings, and a 30-to-90-day timeline layered on top of lender approval delays
- Your lender may require you to be behind on payments before they'll consider a short sale, which can mean intentionally damaging your credit before you've even sold
- Even with lender approval, you may still face a deficiency judgment for the shortfall, depending on what your lender agrees to in writing
- Any forgiven debt may now be taxable income under current federal law, adding an unexpected tax bill on top of an already difficult financial situation
- Every month spent negotiating with your lender and marketing the home is another month of mortgage payments on a property worth less than what you owe
Work Directly With DBC Home Buyers
Work Directly With DBC Home Buyers
Why Couples Choose to Sell to Us
Stress-Free Sale
Skip the arguments over repairs, staging, and listing details. We buy your home as-is, so you can avoid unnecessary complications during an already difficult time.
Close On Your Timeline
Whether you need to sell quickly or wait for legal proceedings to finalize, we work around your schedule—not the other way around.
Transparent & Fair Offers
We walk you through how we arrive at our offer so both parties fully understand the numbers and feel confident in the decision.
We Handle the Details
From paperwork to closing coordination, we simplify every step so you don’t have to deal with added stress or confusion.
Our promise: A simple, honest, and guaranteed sale. No surprises.
Hear What Hundreds of Maryland Homeowners Say About Us
My son found your company online that could buy my house and give me a cash offer. At first, I thought, ‘this has to be too good to be true – probably one of those internet scams’ But we decided to call DBC Home Buyers, and I’m glad we did.
Carol P.
Halethorpe, MD
They did everything they said they were going to do, kept in touch with me the whole way, and we closed in less than a month. I’ve already recommended DBC Home Buyers to friends and family, They’re a company that you can really trust.
Richard S.
Glen Burnie, MD
From start to finish, they delivered exactly what they promised, Melissa and Mason were professional, experienced, and were there for me every step of the way. They gave me a great cash offer and was really impressed with how reliable they were.
Mary K.
Capitol Heights, MD
After doing our research and reading reviews, we chose DBC Home Buyers, and it was the best decision we could have made. Their customer service was top-notch, they honored every commitment, and we were able to close in just 10 days.
Baltimore, MD
Their whole team was great at communicating with us….we felt like we were taken care of every step of the way. We didn’t have to worry about prepping the house or showings or clearing out junk we didn’t need. We actually left a ton of old furniture behind which was nice.
Parkville, MD
My wife and I found their website online, filled out the form, and Melissa called us right away. They fulfilled every part of the agreement, took care of all the paperwork, and we didn’t have to pay any closing costs or agent fees or anything.
Silver Spring, MD
We Work With Underwater and Financially Distressed Homeowners Across Maryland
Financial pressure and negative equity show up together more often than not. In Prince George’s County, a District Heights mortgage delinquency situation reflects rates that have historically run above the county average, often alongside the kind of equity gap that makes a traditional sale harder to pull off. Nearby, a Seabrook double-carry mortgage sale reflects sellers trying to avoid the financial strain of carrying two mortgages, a pressure that compounds quickly for anyone already underwater. And in Baltimore County, a Windsor Mill foreclosure tax sale situation often means back taxes and mortgage delinquency arriving together, which is exactly when negative equity turns a difficult situation into an urgent one.
As one of Maryland’s trusted cash home buyers, our reputation has been built one honest conversation at a time.
Get Your No-Obligation Cash Offer Today
If you owe more on your mortgage than your house is worth and aren’t sure what to do, we’re here to help you understand your options. Selling your house to cash homebuyers like DBC Home Buyers makes it simple to sell a property fast for cash.
You may also view our full Maryland service area to see where we buy houses for cash across Maryland. Fill out the form below to get your free, no-obligation conversation started today.
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