What is a Maryland contractor license and who needs one?

A Maryland contractor license for residential work is the Home Improvement Contractor License issued by the Maryland Home Improvement Commission (MHIC), part of the Maryland Department of Labor, Division of Occupational and Professional Licensing, under Business Regulation Article Title 8. Maryland does not issue a single generic general contractor license. Instead, MHIC licenses anyone who contracts directly with a homeowner to perform home improvement, defined as the alteration, remodeling, repair, or replacement of a residence. To qualify for the MHIC Contractor License you must document at least two years of experience in home improvement work, construction, and/or related education; pass the MHIC contractor exam administered by PSI Examinations; demonstrate financial solvency (or post a surety bond or name an indemnitor); file at least $50,000 in general liability insurance with the application (with at least $500,000 in coverage required under the 2024 statute); and contribute to the Guaranty Fund that compensates wronged homeowners up to $30,000 per claim. The contractor application fee is $281.25 plus a $22.50 processing fee and a $100 Guaranty Fund assessment, the license runs two years, and most applicants finish the path in 2 to 4 months. Building a brand new home is regulated separately: new home builders register with the Home Builder Registration Unit at the Office of the Attorney General, not MHIC.

Every fact below traces to the Maryland Home Improvement Commission, the MHIC published fee schedule, the Home Builder Registration Unit, or Business Regulation Article Title 8. Verify any figure against the source before you pay a fee.

Do you need a contractor license in Maryland?

Per Business Regulation Article 8-601, a person may not act or offer to act as a contractor in Maryland unless the person holds a contractor license, and may not sell or offer to sell a home improvement unless the person holds a contractor or salesperson license. The requirement applies to anyone who contracts directly with a homeowner for home improvement work. Maryland does not maintain a dollar threshold below which unlicensed home improvement contracting is permitted, so even small repair and remodeling jobs for compensation fall under the MHIC licensing requirement.

What counts as home improvement

Home improvement means the alteration, remodeling, repair, or replacement of a building or part of a building used as a residence, including work on an individual condominium unit. It does not cover commonly owned areas of a condominium regime or buildings with four or more single-family units. Routine residential remodeling, additions, roofing, siding, kitchen and bath renovations, decks, and similar work all require an MHIC Contractor License when performed for a homeowner for compensation.

Home improvement vs new home construction

The MHIC license covers work on existing residences. Building a brand new home for sale to a consumer is a different track. Under the Maryland Home Builder Registration Act, builders who construct new homes must register with the Home Builder Registration Unit at the Office of the Attorney General rather than license through MHIC. A contractor who both remodels existing homes and builds new ones may need both an MHIC Contractor License and a Home Builder registration.

Individual vs company license

An individual qualifies and holds the MHIC Contractor License. A contractor who represents a corporation must submit articles of incorporation and a Certificate of Good Standing from the Maryland State Department of Assessments and Taxation. A contractor using a trade name must first confirm the name is available with the Commission, register it with the Department of Assessments and Taxation, and submit the certificate of trade name registration with the application.

MHIC license types and the Home Builder Registration

MHIC issues two active license types, and new home building is registered through a separate state office. Picking the wrong track is the most common early mistake, because a home improvement remodeler and a new home builder answer to different authorities and different statutes.

The three MHIC categories

Maryland law historically recognized three MHIC categories: contractor, subcontractor, and salesperson. The subcontractor license was eliminated as of July 1, 2016, so subcontractors may now work without their own MHIC license when employed by a licensed MHIC contractor. The two active categories are the Contractor License (for those contracting directly with homeowners) and the Salesperson License (for those who sell home improvements on behalf of a contractor).

Salesperson License

A salesperson sells home improvements on behalf of a licensed contractor. Per MHIC, a person may be licensed to represent up to two licensed contractors in selling home improvements. The salesperson application fee is $112.50 plus the $22.50 processing fee, and the salesperson does not pay the Guaranty Fund assessment that contractors pay.

Home Builder Registration (new construction)

Building a new home for sale to a consumer falls under the Home Builder Registration Unit at the Office of the Attorney General, Consumer Protection Division, governed by the Maryland Home Builder Registration Act (Md. Code, Business Regulation 4.5-101 and following). Builders register rather than license, the initial registration fee is $800, and a separate Home Builder Guaranty Fund compensates consumers for losses from a registered builder. Builders who construct new homes solely in Montgomery County follow that county’s separate program. A remodeler who never builds ground-up new homes does not need this registration; an MHIC license is enough.

How to apply for a Maryland contractor license: the 8-step process

Most applicants finish the full path in 2 to 4 months. Gathering experience documentation, preparing for the PSI exam, and assembling the financial-solvency package are the longest phases. Every step below references the MHIC license process, with the governing statute cited inline so you can verify any requirement directly.

1. Confirm you need the MHIC Contractor License

   If you contract directly with homeowners to remodel, repair, or alter existing residences, you need the MHIC Contractor License. If you build new homes for sale, you register with the Home Builder Registration Unit instead. A contractor who does both needs both. Confirm your scope before you start, because the two tracks have separate authorities, fees, and guaranty funds.

2. Document at least two years of experience

   Gather proof of at least two years of experience in home improvement work, construction, and/or related education. MHIC accepts a mix of hands-on trade experience and relevant education toward the two-year requirement. Keep employer references, project records, and any construction-related coursework or degrees, because the experience documentation accompanies your application.

3. Register for and pass the MHIC PSI exam

   Register for the MHIC contractor exam through PSI Examinations, the Commission’s testing vendor. On the PSI site, choose Government and State Licensing Agencies, select Maryland as the jurisdiction, and select MD Home Improvement. You must pass the exam before you submit your license application, and you pay the exam fee each time you sit it.

4. Assemble your financial-solvency package

   MHIC requires proof of financial solvency based on the scope and size of your business relative to total assets, liabilities, a full credit report, and net worth. If you do not meet the financial-solvency guidelines, you may instead purchase a surety bond or obtain an indemnitor. Pull a current credit report and organize your business financials before you apply.

5. Secure general liability insurance

   File proof of at least $50,000 in general liability insurance with your application, and confirm it stays in effect at all times with a 10-day cancellation notice provision. Under the 2024 statute (Business Regulation 8-302.1, effective June 1, 2024), Maryland home improvement contractors must maintain at least $500,000 in general liability coverage, so most applicants carry well above the $50,000 application minimum.

6. Register your business name and entity

   If you operate as a corporation or LLC, submit articles of incorporation and a Certificate of Good Standing from the Maryland State Department of Assessments and Taxation. If you use a trade name, confirm availability with the Commission, register the name with the Department of Assessments and Taxation, and include the trade name registration certificate with your application.

7. Submit the MHIC application and fees

   Submit the contractor license application with the $281.25 application fee, the $22.50 processing fee, and the $100 Guaranty Fund assessment, along with your experience documentation, passing exam result, financial-solvency proof, and insurance certificate. The Guaranty Fund assessment funds homeowner compensation for losses caused by a licensed contractor.

8. Receive your two-year license

   Once MHIC approves the file, it issues the Home Improvement Contractor License, valid for two years from the date of issuance. The license is recorded on the MHIC online verification system, where homeowners, general contractors, and local permit offices confirm a license is current. From issuance you can contract directly with homeowners and pull residential permits within your scope.

The MHIC PSI exam

MHIC contracts with PSI Examinations to deliver the contractor and salesperson exams. Candidates must pass the exam before submitting the license application. The contractor exam covers Maryland home improvement law, business and project administration, contracts, and the rules that govern contractor-homeowner relationships under Business Regulation Article Title 8.

Registering with PSI

Register through PSI Examinations online or by phone. On the PSI homepage, select Government and State Licensing Agencies, choose Maryland as the jurisdiction, and select MD Home Improvement as the account. PSI publishes a candidate information bulletin with the test centers, the content outline, and the current exam fee. You pay the exam fee directly to PSI at scheduling, and you pay it again for each retake.

Preparing for the exam

Most candidates with strong trade backgrounds focus their prep on the legal and business side, since the exam emphasizes Maryland home improvement law, contract requirements, and Guaranty Fund rules rather than hands-on construction technique. Review the MHIC contract requirements under Business Regulation Title 8 and the PSI content outline before scheduling. Confirm the current PSI exam fee in the candidate bulletin before you register, because PSI sets and updates that fee.

Financial solvency and the Guaranty Fund

Two financial requirements set the MHIC license apart from many other states: a financial-solvency review at application and a mandatory contribution to the Guaranty Fund that protects homeowners.

Financial solvency

MHIC reviews each applicant’s financial solvency based on the scope and size of the business in relation to total assets, liabilities, a full credit report, and net worth. The Commission wants assurance that the business can stand behind its contracts. An applicant who does not meet the financial-solvency guidelines is not automatically denied; the applicant may instead post a surety bond or name an indemnitor to satisfy the requirement. Pull your credit report early so you can correct any errors before the Commission reviews the file.

The Guaranty Fund

The MHIC Guaranty Fund compensates homeowners for actual losses caused by a licensed contractor, up to $30,000 per claim (or the total amount of payments made on the contract). Every contractor funds it through the Guaranty Fund assessment: $100 when applying for a new license and $175 at each two-year renewal. Because the Fund is tied to your license, a homeowner can only recover from it against a licensed contractor, which is one reason unlicensed work leaves homeowners without this protection and the contractor exposed.

Insurance and bond requirements

Maryland sets a clear insurance floor for MHIC contractors and offers a bond as an alternative path through the financial-solvency requirement. Both are worth understanding before you assemble the application.

General liability insurance

You must file proof of at least $50,000 in general liability insurance with the application, and the coverage must stay in effect at all times, with a 10-day notice required before cancellation. Separately, under the 2024 statute (Business Regulation 8-302.1, effective June 1, 2024), Maryland home improvement contractors must maintain general liability insurance of at least $500,000. In practice, virtually every working Maryland contractor carries a policy at or above the $500,000 level, and many carry $1,000,000 per occurrence to satisfy larger clients and general contractors.

Surety bond as a solvency alternative

Maryland does not require a standalone state surety bond for every MHIC contractor. A surety bond comes into play as one way to satisfy the financial-solvency requirement: an applicant who does not meet the solvency guidelines may post a surety bond or name an indemnitor instead. Bond premiums depend on the bond amount and the applicant’s credit, so contractors with limited business financials often use a bond to clear the solvency review.

Setting up your contracting business in Maryland

An individual qualifies for the MHIC license, but most contractors operate through an LLC or corporation. Entity formation and trade-name registration are prerequisites, not afterthoughts, because the Commission asks for the supporting documents at application.

Entity choice and SDAT registration

Most Maryland residential contractors run as a single-member LLC or a Maryland corporation. The LLC is the most popular structure because it gives liability protection without double taxation. Both register with the Maryland State Department of Assessments and Taxation (SDAT). A corporation or LLC applicant must submit articles of incorporation or organization and a Certificate of Good Standing with the MHIC application.

Trade name registration

If you operate under a trade name, confirm with MHIC that the name is available for use with the Commission, then register the trade name with SDAT. The certificate of trade name registration must accompany your license application. Skipping this step is a common cause of application holds, so handle it before you file.

Federal EIN and Maryland tax registration

Pull a free EIN from the IRS. Register with the Comptroller of Maryland for sales and use tax if your work involves the retail sale of materials, and register with the Maryland Division of Unemployment Insurance once you hire your first employee. Contractors with employees also carry workers’ compensation coverage as required under Maryland law.

Total cost of a Maryland contractor license in 2026

Most Maryland applicants complete the MHIC Contractor License for a total state-and-exam cost in the $450 to $650 range, plus the PSI exam fee and the cost of the first year of insurance. The largest variable is insurance, since the 2024 statute requires maintaining at least $500,000 in coverage. The timeline depends on how quickly you document experience and prepare for the PSI exam.

MHIC contractor fees (original license)

Other initial and ongoing costs

Beyond the MHIC and PSI fees, budget for general liability insurance (carrying at least $500,000 under the 2024 statute; premiums for a small Maryland residential contractor commonly run several hundred to a few thousand dollars a year depending on revenue and trade), an optional surety bond if you use one to satisfy the solvency requirement, entity formation and trade-name registration with SDAT, and any local permit and registration fees in your county or city. Total estimated initial cost: roughly $450 to $650 in MHIC fees plus the PSI exam fee, with first-year insurance the largest additional line item.

2-year renewal

A Maryland MHIC Contractor License is valid for two years from the date of issuance and must be renewed every two years. MHIC sends a renewal notice roughly 60 days before expiration to the address of record, and renewal is available online with a credit card or by mail. There is no statewide continuing-education requirement to renew the MHIC Contractor License.

Renewal fees

At renewal you pay the contractor application fee of $281.25 plus the $175 Guaranty Fund assessment for the new two-year period. The renewal Guaranty Fund assessment is higher than the $100 original assessment. Keep your address of record current in the MHIC system so the renewal notice arrives on time, because a lapsed license cannot be used to contract with homeowners until it is renewed.

Penalties for unlicensed work in Maryland

Maryland enforces the licensing requirement under Business Regulation Article Title 8. Acting as a contractor or selling a home improvement without the required license is a crime, and the financial downside extends well past the criminal fine.

Per Business Regulation 8-601, a person who acts as a contractor or sells a home improvement without the required license is guilty of a misdemeanor. On a first conviction, the penalty is a fine not exceeding $1,000 or imprisonment not exceeding 6 months, or both. On a second or subsequent conviction, the penalty rises to a fine not exceeding $5,000 or imprisonment not exceeding 2 years, or both. Beyond the criminal penalty, contracts entered by an unlicensed contractor for work requiring a license are generally unenforceable in Maryland, so the unlicensed contractor cannot sue to collect payment, and a conviction can bar the person from holding a license for a period. MHIC investigates complaints of unlicensed activity and refers cases for prosecution.

Common reasons MHIC denies a Maryland contractor license application

The Commission reviews every application and returns a meaningful share at first submission. Most issues cluster around a few recurring causes. Knowing them upfront saves a processing cycle and a refile.

1. Insufficient experience documentation. Applicants who cannot clearly show two years of home improvement, construction, or related education experience stall at review. Organize employer references, project records, and any construction-related coursework so the two-year requirement is documented on paper, not just asserted.
2. Failing the financial-solvency review. An applicant with thin business financials, high liabilities, or credit issues can fall short of the solvency guidelines. The fix is built into the process: post a surety bond or name an indemnitor instead. Pull your credit report early so you can resolve errors and choose the right path before filing.
3. Insurance shortfall. Applications without the required general liability insurance certificate on file are held. Confirm your policy meets at least the $50,000 application minimum and that you maintain at least $500,000 in coverage under the 2024 statute, with the 10-day cancellation-notice provision in place.
4. Trade name or entity paperwork missing. A corporation or LLC applicant who omits the Certificate of Good Standing, or a trade-name user who skips SDAT registration, triggers a hold. Verify name availability with MHIC, register with SDAT, and include the certificates with the application.
5. Exam not passed before applying. You must pass the PSI exam before MHIC accepts the license application. Applicants who submit the package before clearing the exam have the application returned. Sit and pass the PSI exam first, then file.
6. Wrong track for new home construction. An applicant who actually builds new homes for sale needs Home Builder Registration with the Office of the Attorney General, not an MHIC license. Submitting an MHIC application for ground-up new construction routes the work to the wrong authority. Confirm your scope before you file.

Local jurisdiction rules across Maryland

The MHIC license is the statewide qualification to contract with homeowners, but Maryland counties and municipalities add their own permit and registration layers on top. The MHIC license does not replace a building permit, and several jurisdictions run their own contractor programs.

Plan local permits as part of the project timeline, not as an afterthought. Montgomery County applies the most distinct rules, running its own consumer-protection program for builders and home improvement contractors. In every other county, the MHIC license qualifies you to contract, and the county or city permit office handles the building permit and inspections for each job.

Bottom line

For residential remodeling, repair, and alteration in Maryland, the credential you need is the MHIC Home Improvement Contractor License. The path is consistent: document two years of experience, pass the PSI exam, clear the financial-solvency review (or post a bond or name an indemnitor), file general liability insurance, and contribute to the Guaranty Fund. Plan 2 to 4 months, budget roughly $450 to $650 in MHIC fees plus the PSI exam fee and first-year insurance, and renew every two years with the $175 Guaranty Fund assessment. If you build brand new homes for sale, that is a separate $800 registration with the Home Builder Registration Unit. Get the right credential and you can contract with confidence anywhere in Maryland.

Resources and next steps

Bookmark these for the application, renewal, or compliance questions:

• Maryland Home Improvement Commission — license requirements, forms, and verification
• MHIC Forms and Fees — current fee schedule
• Home Builder Registration Unit — new home construction registration
• Business Regulation Article 8-601 — statutory basis and penalties
• Maryland State Department of Assessments and Taxation — entity and trade-name registration

For a state-by-state overview, see our national general contractor license guide. For a neighboring home-improvement-state comparison, see our Pennsylvania home improvement contractor license guide.