Divorce and Your Mortgage in California
Keeping the house, buying out your ex, getting your name off the loan, and buying again. What the loan rules allow, and what to sort out with your attorney first.
Key Takeaway
A deed changes who owns the house; only a refinance or an approved assumption changes who owes the loan. If you keep the home, you can usually buy out your ex with a refinance. FHA allows up to 97.75% of the home's value for that buyout. Alimony and child support count as income once you have received them for 6 months (3 months for FHA) and they will continue for 3 more years.
Keeping the House: Buying Out Your Ex
Refinance into your name and pay your ex their share of the equity.
To keep the home, you refinance the mortgage into your name alone and use the new loan to pay your ex the equity your settlement awards them. California is a community property state, so the equity is usually split, and the agreement sets the amount. Each loan type treats the buyout differently:
| Loan | Treated as | Key rules |
|---|---|---|
| Conventional (Fannie Mae) | Limited cash-out refinance | Written agreement between both owners; both on title for 12 months before closing; you take no cash out. |
| Conventional (Freddie Mac) | Special purpose cash-out refinance | Both owned and lived in the home for 12 months; all proceeds go to your ex; cash-out limit applies (80% of value for a single-family home you live in). |
| FHA | Rate and term refinance | Divorce decree or settlement agreement; up to 97.75% of value if you lived there the past 12 months, otherwise 85%. |
| VA (veterans) | Cash-out refinance | Up to 100% of the home's value; no time-on-title requirement; VA-to-VA refinances need 210 days and 6 payments. |
A limited cash-out or rate and term refinance usually prices better than a cash-out refinance, so it matters which one your buyout qualifies for. You still have to qualify for the new payment on your own income, which is where support income helps.
Getting Your Name (or Your Ex's) Off the Loan
Owning the house and owing the mortgage are two separate things.
A quitclaim or interspousal transfer deed takes a person off the title. It does not take them off the mortgage. Until the loan is paid off, refinanced, or assumed, both of you still owe it, and late payments still report on both of your credit.
- Refinance: the spouse keeping the home takes a new loan in their own name, which pays off the joint loan.
- Assumption: FHA and VA loans can be assumed with the servicer's approval, which can release the departing spouse and keep the existing rate. Conventional loans rarely allow it.
- Sell: the loan is paid off from the sale and the proceeds are split under your agreement.
Qualifying With Alimony or Child Support
Support you receive can count as income once it has a track record.
Conventional
Fannie Mae and Freddie Mac need 6 months of full, regular payments received, and the payments must continue for at least 3 years. A signed separation agreement works if the divorce is not final. Voluntary payments with no agreement do not count.
FHA
FHA needs 3 months of payments received under a decree or court order, continuing for at least 3 years. Voluntary payments need 12 months of records with 6 months of consistent payments.
Timing matters: support set by a brand-new decree cannot be counted until payments have actually started and built the required history. If you need that income to qualify, plan the refinance or purchase around it.
Support You Pay and Debts Assigned to Your Ex
Your divorce paperwork changes how lenders count your monthly debts.
If you pay support
Child support always counts as a monthly debt. Alimony you pay can instead be subtracted from your income, which often gives you a better debt ratio. Fannie Mae and FHA allow either method; Freddie Mac subtracts it from income.
Debts your ex now owes
When your decree or separation agreement assigns a debt, such as the old mortgage or a car loan, to your ex, a lender can leave its payment out of your debt ratio with a copy of that order. Without the order, the lender needs 12 months of proof that your ex made the payments on time.
Buying Before the Divorce Is Final
Possible in some cases, but coordinate with your attorney first.
- Conventional loans accept a signed separation agreement in place of a final decree for support income and assigned debts.
- With an FHA loan in California, your spouse's debts count in your debt ratio until the divorce is final, even if you are not on them.
- Because California is a community property state, the title company will usually ask your spouse to sign an interspousal transfer deed so the new home is yours alone.
- We can talk with your attorney, with your permission, so the loan timeline fits the settlement.
Buying Your Next Home
Which programs are open to you after a divorce.
CalHFA's down payment assistance is only for first-time buyers: no ownership of a home you lived in, and no living in a home your spouse owned, during the last 3 years. CalHFA has no divorce exception, so if you co-owned the marital home in that window, MyHome and Dream For All are not available yet.
Other paths still work. FHA needs 3.5% down and allows gifts for the down payment, and some down payment programs outside CalHFA are open to repeat buyers. Your share of the equity from the old home can also become your down payment.
Documents to Gather
Having these ready saves weeks.
- Final divorce decree, or the signed marital settlement or separation agreement if the divorce is not final
- The pages of the agreement that set support amounts, assign debts, and award the house
- Proof of support received: 6 months of bank statements or canceled checks (3 months for FHA)
- If you pay support: your pay stubs for the last 28 days and the order that sets the amount
- Mortgage statement for the current loan and the property's insurance and tax bills
- The usual income and asset documents: pay stubs, W-2s or tax returns, and bank statements
Divorce and Mortgage FAQ
Answers to the questions we hear most from people going through a divorce.
See What You Can Qualify For on Your Own
Tell us about the home and your income, including any support. A local loan officer will walk you through the buyout or purchase options, confidentially.
We are a mortgage broker, not attorneys or tax advisors. Talk with your attorney about your settlement and with a tax professional about the tax effects of a buyout or sale.
This information is not intended to be an indication of loan qualification, loan approval or commitment to lend. Rates, terms, and availability of programs are subject to change without notice.
Last updated: October 2026