Spousal Buyout Mortgages: Keeping the Family Home

How a Spousal Buyout Works

In a spousal buyout, one partner keeps the family home by “buying out” the other partner’s equity share. Here’s the typical process:

1. Determine the equity split: Usually defined in your separation agreement
2. Get an appraisal: Establish current market value of the home
3. Qualify for the new mortgage: Based on your income alone
4. Refinance: New mortgage in your name only, large enough to pay out your ex
5. Complete the transfer: Title transfers to you; funds go to your ex

Qualification Considerations

The biggest challenge in a spousal buyout is qualifying for the mortgage on a single income. Here’s what lenders consider:

• Your employment income: Salary, hourly wages, or self-employment income
• Child support received: Can count as income with proper documentation
• Spousal support received: Can count as income with proper documentation
• Your debts: Including any support payments you’re making
• Credit score: Joint debts may have affected your credit during separation

Using Support Payments as Income

Both child support and spousal support can count toward your income for mortgage qualification. Lenders typically require:

• Signed separation agreement or court order
• Proof of consistent receipt (usually 3-6 months)
• Confirmation payments will continue for at least 3 years (for spousal support)

If your separation is very recent and you haven’t yet established a payment history, some lenders can work with the agreement alone — we’ll match you with the right lender.

The Equity Buyout Calculation

Here’s a simplified example:

• Home value: $600,000
• Existing mortgage: $300,000
• Equity: $300,000
• Ex’s share (50%): $150,000

You would need a new mortgage of approximately $450,000 ($300,000 to pay off the existing mortgage + $150,000 to pay your ex their share). This assumes a 50/50 split — your separation agreement may specify a different split.

What You’ll Need for Your Application

• Signed separation agreement or court order
• Recent property appraisal
• Income documentation (employment letter, pay stubs, tax returns)
• Proof of support payments received (if applicable)
• Bank statements showing down payment/closing costs

If your separation agreement isn’t finalized yet, we can sometimes work with draft agreements. The sooner you involve us, the smoother the process.

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