The effects of moisture and drying shrinkage can lead to uneven settlement, cracking, and other diseases in loess subgrade. The objective of this study was to investigate the effects of amide polymer (AP) on the permeability, mechanical properties and crack resistance of loess by orthogonal experiments. The basic properties of AP and the permeability, mechanical properties, and dry–wet variation properties of polymer-modified loess were tested, and a scale model verification and simulation analysis were conducted. In this paper, water migration in subgrade is regulated by improving the water sensitivity of loess. By reducing the variation range of subgrade water content, the stress accumulation in subgrade caused by water is weakened. The results show that the curing time and mechanical properties of AP are directly affected by the oxidant and reducing agent, and the mechanical properties of AP are compatible with the characteristics of loess. AP filled the grain gap and reduced the permeability of loess by 34.05–280.83%. The ductility of polymer-modified loess is significantly increased, and the strain of peak strength is increased by 17.21–126.36%. AP can regulate moisture change, reduce the surface tension between particles, and reduce stress concentration. The strength loss rate was reduced by 19.98–51.21% by enhancing the cracking resistance and weakening the strength loss caused by dry and wet cycling. The increase of upper layer moisture content in the scale model of polymer-modified loess subgrade is reduced by 31.38–36.11%.