Spousal Buyout Mortgages, Explained Simply
How to keep the home (or help your ex keep it) after a separation.
The quick version
A spousal buyout lets one owner refinance the home to buy out the other owner's share.
Some lenders allow up to 95% of the home's value with default insurance, instead of the usual 80% refinance limit.
You will need a signed separation agreement.
The money can only be used to buy out your ex and pay off joint debts listed in the agreement.
The home must be your primary residence.
Going through a separation? Book a call. Everything we discuss stays completely confidential.
What is a spousal buyout?
For most people, the home is the biggest asset and holds most of the equity. A spousal buyout mortgage lets you refinance the home so you can buy your ex-spouse's share and stay in it. If your ex wants to keep the home instead, they can use the same program to buy you out.
Normally, you can only refinance up to 80% of your home's value. A spousal buyout is special: with default insurance, some lenders will go up to 95%. That can make keeping the home possible when it otherwise would not be.
Common questions
Do I need a finalized separation agreement?
Yes. The lender needs a signed separation agreement that clearly shows how your assets are being divided.
Can I use the money for renovations or other loans?
No. The funds can only be used to buy out the other owner's equity and pay off joint debts, as set out in the separation agreement.
How much can I borrow?
The lesser of 95% of the home's value, or your current mortgage plus the amount needed for the buyout and joint debts.
Does everyone have to be on title?
Yes. Both people must already be registered owners. Your lawyer will confirm this with a title search.
Do we have to be married or common-law?
Not always. Some lenders and insurers will consider other co-owners, like friends or siblings, on an exception basis. In that case, the buyout is spelled out in the purchase contract instead of a separation agreement.
Do I need an appraisal?
Yes. A full appraisal of the home is required.
Do I still have to qualify?
Yes. You will need to qualify on your own income, including the stress test and debt ratios. Support payments you receive or pay are part of that picture.
Before you sign anything
Talk to me before your separation agreement is final, so we know what is possible
Get legal advice from your own family lawyer
Make sure the agreement clearly lists the buyout amount and any joint debts to be paid
You do not have to figure this out alone
Separation is hard enough. I will walk you through your options, compare lenders for you and help you build a plan that gives you a fresh start. All conversations are held in the strictest confidence. Book a call whenever you are ready.
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