WHAT IS A SPOUSAL BUYOUT MORTGAGE?
- johnathanmcquoid
- Jan 17
- 2 min read
Going through a separation or divorce is overwhelming — emotionally and financially.
But many people don’t realize there is a special mortgage program that allows one partner to keep the home by buying out the other.
This can help avoid selling the property, uprooting children, or losing equity you’ve both worked hard to build.
Here’s how it works 👇
🏡 What is a spousal buyout mortgage?
It allows one spouse (or partner) to refinance the home up to 95% of its value in order to:
✔️ buy out the other owner’s share
✔️ pay off joint debt included in the separation agreement
This program is available for married couples, common-law partners, and in some cases even siblings or friends who co-own a home.
📝 Do you need a finalized separation agreement?
Yes — the lender must see a signed agreement outlining:
✔️ how assets are being divided
✔️ who is keeping the home
✔️ what amount is being paid out
✔️ any joint debts being settled
No agreement = no approval.
💰 Can you take extra money for renovations or personal use?
❌ No.
Funds can only be used to:
✔️ buy out the other owner’s equity
✔️ pay off joint debt noted in the separation agreement
You cannot withdraw additional funds for:
• renos
• vacations
• vehicles
• personal loans
📊 How much equity can you access?
Up to 95% loan-to-value (LTV), but only for the exact amounts stated in the separation agreement.
Example:
If the home is worth $600,000, and the buyout amount is $150,000, the new mortgage can be structured to include that amount (as long as it remains under the 95% LTV limit).
🔍 Do all owners need to be on title first?
Yes — everyone involved must already be a registered owner on title.
Your lawyer will confirm this.
👫 Does this apply only to married couples?
No.
In special cases, insurer approval can allow:
✔️ friends
✔️ siblings
✔️ business partners
to buy each other out if both are currently on title.
Instead of a separation agreement, the lawyer drafts a clause outlining the agreed-upon buyout amount.
🏠 Is an appraisal required?
Yes — a full appraisal is mandatory.
This ensures the buyout value is based on today’s fair market value, not past estimates or guesses.
💬 Final Thought
A spousal buyout mortgage can be a powerful solution to help one owner keep the home, maintain stability, and avoid selling during a stressful time.
If you want to explore whether you qualify — or need to understand your options privately — message The Frontline Mortgage Group anytime. All conversations are 100% confidential. 💬