Divorce Mortgage Solutions

Dealing with the financial complexities of a divorce can be overwhelming. As a designated Real Estate Collaboration Specialist in Divorce and a Certified Mortgage Planning Specialist, Kim Renquest is dedicated to offering sensitive, personalized mortgage solutions to those undergoing this challenging life transition.


When going through a divorce, typically the first question that comes to mind is “What are we doing with the house?” Evaluating if one of you can keep the house, buy the other spouse out, qualify to refinance on your own, or to sell it and see how your living situation will look post-divorce is a lot to take in on your own, and not easy to gather all the necessary information without having a team behind you. Kim provides the support and expertise you need to navigate your mortgage and home options with confidence.

>> What Are Your Divorce Mortgage Options?

In a divorce, deciding who gets the house is a major decision that often depends on the divorce and mortgage details. If your name isn’t on the mortgage, understanding your rights is essential. It’s also important to understand how divorce affects your home loan and mortgage responsibilities.


Refinancing a Mortgage After Divorce

Refinancing the existing mortgage to have only one spouse’s name is often the cleanest solution in a divorce. After the mortgage refinance closes, only the person named on the mortgage would be responsible for making the monthly payments. The person no longer named on the mortgage could then be removed from the home’s title.

>> Here's An Example

Let’s say John and Jennifer jointly own a home valued at $300,000 with a remaining mortgage balance of $200,000. They decide Jennifer will keep the house. Jennifer could refinance the mortgage into her name alone for $250,000. She’d use $200,000 to pay off the original joint mortgage, then pay John the remaining $50,000 for his share of the equity.


Refinancing into a new mortgage could be the simplest solution, but it works only when one spouse can qualify for the loan on their own. Mortgage eligibility will depend on factors such as:

Borrower's Income

A single borrower often earns less than a couple, making it harder to qualify for a mortgage individually. The lender will verify the single borrower’s income and compare it to their monthly debts.

Borrower's Credit Score

The person refinancing the mortgage loan must have a high enough credit score to qualify. FHA, VA, and USDA loans have more lenient credit score requirements.

Borrower's Home Equity

Limited equity from a recent purchase or small down payment can hinder refinancing. Conventional loans typically require at least 3% home equity, while FHA and VA loans allow refinancing with little to no equity.

>  Refinancing With Low Home Equity

Certain refinance options allow you to remove a spouse’s name from the original mortgage, despite a home’s low equity position.


  • FHA Streamline Refinance: If you already have an FHA loan on the home, you can use the FHA Streamline Refinance to remove a borrower without checking home equity. However, the remaining spouse must have been making the entire mortgage payment for the past six months.
  • VA Streamline Refinance: VA loan holders can use a VA Streamline Refinance to remove a spouse’s name from their current VA mortgage after a divorce. Typically, the spouse who is a veteran must remain on the home loan.
  • USDA Streamline Refinance: Loans backed by the U.S. Department of Agriculture can qualify for Streamline Refinancing if you already have a USDA loan.
  • Conventional Refinance: Conventional loans do not offer a Streamline Refinance option. However, it’s possible to refinance a conventional loan with low home equity.

>  Buy Out Your Ex-Spouse’s Share of the Home Equity

In many states, courts will split the built-up equity in a home between the two divorcing partners. If you’re keeping the home and don’t have enough cash to buy out your ex-spouse’s share, you’ll need to use the home’s equity for a “divorce and mortgage” buyout agreement.


A home equity loan or HELOC could access your equity without refinancing the first mortgage. You’d keep making your current mortgage payment and add a second monthly payment to pay off the home equity loan.


Example: Imagine your home is worth $400,000 and you still owe $250,000 on the mortgage. That leaves $150,000 in equity. If you need to pay your ex-spouse $75,000 for their share but don’t have the cash, you could take out a home equity loan for that amount. You’d continue paying your existing $250,000 mortgage along with the new $75,000 home equity loan.

>  Selling the Marital Home During Divorce

Selling the home lets divorcing couples split the profits and go their separate ways. Equity is important when selling, as it typically costs between 7% to 10% of the value of your home to sell.


Example: If your home is worth $300,000 and you owe $250,000, selling would leave you with about $30,000 in profit after a 6% agent commission of $18,000 and around $2,000 in other closing costs.

>  Keeping the Marital Home and Mortgage After Divorce

If selling or refinancing the marital home isn’t feasible or desirable, keeping the existing mortgage is an option. However, it’s risky, as both parties remain liable for the payments.


  • Risk to Future Home Loan Eligibility: Leaving your ex’s name on the mortgage post-divorce may impact their ability to buy a new home in the future. A borrower’s debt-to-income ratio (DTI) is crucial when qualifying for a new mortgage.
  • Risk of Missed Payments: This situation can lead to missed mortgage payments if your former partner won’t or can’t abide by the divorce decree.


Example: Say your former spouse is supposed to pay the mortgage each month, but your name remains on the loan. If your former partner misses a payment, your credit score could fall significantly.

>> Divorce and Mortgage: Key Financial Concerns

Understanding the financial implications of handling your mortgage during a divorce is important. It’s not just about splitting assets; it’s also about securing your personal finances.


  • Determine Your Home Equity in a Divorce: Get a professional appraisal to establish exactly how much equity you have.
  • Protect Your Credit History During Divorce Proceedings: Keep up with all bills during the divorce to safeguard your credit.
  • Tax Implications of Divorce and Mortgage: Selling your home during a divorce or purchasing your spouse’s share might trigger capital gains tax if the profit exceeds the exempted amount.


*Please note that this information is not intended as tax advice, and you should consult a tax professional for guidance on specific situations.

>> Our Services for Divorcing Partners

We provide comprehensive services to help you navigate the complexities of mortgage options during a divorce. Our services include:

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Personalized consultations to understand your financial situation and goals.

Detailed analysis of mortgage options, including refinancing and loan assumption.

Assistance with legal and financial paperwork related to the mortgage.

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Coordination with attorneys and financial advisors to ensure a smooth transition.

FAQs About Divorce Lending

  • What if my spouse refuses to negotiate over the mortgage?

    Divorce can be very challenging, and sometimes, one spouse becomes determined to inflict as much damage as possible on the other. Unfortunately, they often do this by withholding financial assets or outright refusing to negotiate over finances.


    If you find yourself in this situation, you should seek out the advice of an attorney immediately. You may need to cease communications with your spouse and let the lawyers handle things for a while.

  • Our current mortgage has a good rate and a monthly payment I can afford. Can I just remove my spouse and assume this loan as it is?

    Assuming the home loan, where one spouse takes full responsibility for the mortgage, is a popular option. Like refinancing, spouse A will remain as the sole borrower, and spouse B will be freed from future liabilities. This approach can be more advantageous than refinancing if the assumable interest is lower than current market rates. 


    Unfortunately, not all home loans are assumable. In fact, most mortgages made after 2008 do not have an assumable feature. Avoid wasting time by calling your lender and asking for a copy of your original promissory note to know whether your home loan is assumable or not.

  • Can I use my spousal support as income for qualifying for a new loan?

    It depends. There are several guidelines structured around the usage of spousal and child support payments. The most common requirements are that full payments have been received for at least six months and will continue for at least three years from the loan application date.

  • What are the risks if I stay on the loan of our marital home, even though my ex will be living in the house?

    As long as you are on the mortgage, you are financially responsible for the repayment. 


    Even if your ex-spouse is financially stable, knowledgeable, and you trust that they will make the monthly payments, you are exposing yourself to financial havoc. Just one missed or late payment will cause significant damage to your credit score, which may cause you to become ineligible for qualifying for credit.


    Additionally, the monthly payment of the marital home will be required to be included in your debt ratios when you try to apply for your own mortgage, possibly making your debt-to-income ratio exceed the allowable limit to qualify.

>  Still unsure where to start or have questions?

For those seeking more specialized services, we offer tailored solutions for divorce and mortgage financing.


If you are looking for divorce mortgage consulting services or a divorce mortgage specialist, look no further. Kim Renquest is here to help you through every step of your post-divorce homeownership journey. Contact us today for more information on how we can assist you.