Divorce changes income, credit, and housing all at once, and the mortgage decisions made in the first few months can lock in costs for years. One of the most common surprises is that the decree decides who owes whom, but it does not bind the loan servicer. If both names are on the note, both of you stay responsible until the loan is paid off, refinanced, or formally assumed with a release.
I’m Duane Buziak, and I walk Glen Allen, Short Pump, and Henrico County homeowners and buyers through this every month. Below are seven mortgage options for divorced individuals, grouped so you can match the path to your settlement rather than take the first one offered. None of this is legal or tax advice, so run your plan past your divorce attorney too.
By Duane Buziak, NMLS #1110647
1. Refinance to Remove an Ex-Spouse From the Loan
A refinance replaces the joint mortgage with a new loan in one name. The old note is paid off, so the departing spouse is released automatically, with no reliance on the other person to keep paying. This is the cleanest break, and the main reason to choose it.
Start with the mistake I see most: people believe a quitclaim deed removes an ex from the mortgage. A quitclaim deed only transfers ownership of the property. The mortgage is a separate promise to the servicer, and the person who signed it remains liable even after their name leaves the deed.
For example, imagine a Twin Hickory homeowner who keeps the house with a $300,000 balance. This is an illustration, not a client result. If the old loan carries a 3.5% rate, principal and interest run about $1,347 a month. A new 30-year loan at a hypothetical 6.5% would be about $1,896. Add roughly $450 for taxes and insurance and a $350 car payment, and on $6,500 of gross monthly income the debt-to-income ratio (DTI, your monthly debts divided by gross monthly income) lands near 41.5%. That is workable, but the payment jump of about $550 a month is the real cost of the clean break.
- Gather the divorce decree, recent pay stubs, tax returns, and support documentation.
- Run a soft credit pull mortgage review so you see your standing without a hard inquiry.
- Compare a refinance against an assumption (Option 2) to see which preserves more value.
- Close, then record the deed change so title matches the loan.
Measure three things: DTI, the new payment against the old one, and a recorded release of liability or paid-off note for your ex. Timing depends on your settlement, and some decrees give you months to refinance. Check the deadline with your attorney before assuming you must act immediately.
2. Assume the Existing Mortgage or Keep the Low Rate
An assumption means you take over the existing loan, with its current rate and remaining balance, rather than originating a new one. FHA and VA loans are generally assumable, as are USDA loans, though most of Henrico County is not in a USDA-eligible area, so check the property map first. Most conventional loans are not assumable.
The value is the rate. Suppose, as an illustration, a spouse assumes a VA loan after divorce and keeps a 3% rate while the market sits well above it. On a $300,000 balance, the gap between 3% and a 6.5% new loan is roughly $650 a month in principal and interest. Check the current market using the weekly average on Freddie Mac’s Primary Mortgage Market Survey, and treat any rate as true only “as of” that week.
The pitfall is skipping the release of liability, the written statement from the servicer that the departing borrower is no longer responsible. Without it, an assumption can leave your ex on the hook for a loan they no longer control, and your credit exposed if they ever dispute it. With VA loans there is a second catch: if the person assuming is not a veteran who substitutes their own entitlement, the original veteran’s entitlement stays tied up in that loan. The VA home loan page covers the basics.
- Call the servicer and ask for assumption requirements in writing, including fees and timeline.
- Submit income and credit documents so the servicer can approve you alone.
- Request a written release of liability for the departing spouse before you sign.
Measure the rate saved against a new loan, the approval timeline, and whether the release is in hand. Assumptions can be slow, and you may still need cash to pay out your spouse, which leads to Option 3.
3. Cash-Out Refinance to Buy Out Your Spouse’s Equity
A buyout pays your spouse their share of the home’s equity. A cash-out refinance funds it by borrowing more than you owe now: the new loan pays off the old one, removes your ex from the note, and sends the settlement amount to them at closing.
Take a Wyndham illustration. The home is worth $520,000 with a $260,000 balance, and the settlement calls for a $130,000 buyout. The new loan is $390,000, a loan-to-value (LTV) ratio of 75%. At a hypothetical 6.5% over 30 years, principal and interest would be about $2,465. Had the original $260,000 been at 3.5%, that balance alone would cost about $1,167. The difference shows the cost of this route.
That is the common mistake: assuming the new rate applies only to the cash-out portion. It applies to the whole balance, so you give up a low existing rate on money you already owed. If your first mortgage rate is well below the market, ask me to compare a cash-out refinance against a separate second loan for the buyout. Cash-out refinances can go as high as 90% LTV in some programs, though pricing and requirements tighten as LTV rises, and the 2026 baseline conforming limit for Henrico, set by FHFA, is $832,750.
- Order an appraisal so the equity split rests on a real value, not an estimate.
- Confirm the exact buyout figure in the signed settlement.
- Check LTV against program limits.
- Close with funds paid directly to your ex at the table.
Measure LTV, the blended cost against your current loan, and total closing costs. If the buyout costs more in monthly payment than you can carry, that matters as much as the equity math.
4. Buy a New Home After Divorce With a Conventional Loan
If you are selling the marital home, you can qualify on your own and buy a new primary residence. A conventional loan, one not backed by a government agency, works well when you have steady income, decent credit, and sale proceeds for a down payment.
Consider a hypothetical buyer with $70,000 of net sale proceeds and $1,200 a month in documented child support. The proceeds cover a 5% down payment on a home near Innsbrook or West Broad Village with room left for reserves. The support may count toward qualifying, but only if it meets the documentation rules, which brings up the key pitfall: counting support without the required history and continuance.
Alimony and child support do not automatically count as income. Under the Fannie Mae Selling Guide, support generally needs a documented history of receipt, commonly around six months, and at least three years of continuance remaining from your application date. A child who ages out in two years can make that income unusable. Rules vary by program and can change, so I confirm them at application. You are also never required to disclose support you do not want counted.
- Collect the decree, support payment history, and two months of bank statements.
- Get a mortgage pre approval without hard pull through a soft pull mortgage broker, so shopping costs you nothing on your score.
- Confirm the conforming limit, $832,750 in Henrico for 2026, so your price range stays in conventional territory.
- Shop homes with a pre-approval letter ready.
Measure DTI, whether each dollar of your down payment is sourced and documented, and the pre-approval amount. Before you draw it up, decide whether the amount is one you would choose even if every support payment stopped.
5. Use an FHA Loan to Rebuild With Flexible Credit Standards
Divorce often leaves credit scarred in ways that have nothing to do with how you manage money: late payments on joint cards, a car loan your ex stopped paying, or utilization spiking while you split households. FHA loans, insured by the Federal Housing Administration, accept lower scores and smaller down payments than most conventional options. As of the most recent HUD guidance, a 580 score can qualify for 3.5% down, with scores between 500 and 579 needing more, but confirm current rules before you plan.
As an illustration, imagine a buyer whose score dropped after joint-account late payments during the separation. Documenting that the lates trace to the separation, and showing twelve clean months since, can support an approval a rigid credit cutoff would deny. Lenders and insurers still judge each file, so I do not promise any outcome, but the context matters.
- Start with the NoTouch Credit Pull, which lets me review your full credit picture with no credit hit.
- List every shared account and decide which to close, pay down, or have your ex refinance.
- Compare FHA mortgage insurance against conventional PMI on your actual numbers.
The common mistake is ignoring long-term mortgage insurance. FHA charges an upfront premium and an annual one, and with less than 10% down the annual premium generally lasts for the life of the loan. Conventional PMI can be removed once you reach enough equity. A buyer who rebuilds credit in two years may be better off refinancing out of FHA later, so plan that exit now.
Measure your credit score trend, DTI, and the total monthly payment including mortgage insurance, not just principal and interest.
6. Tap VA Loan Benefits
For eligible veterans, service members, and some surviving spouses, a VA loan offers no required down payment and no monthly mortgage insurance. That combination matters when a divorce has tied up your cash. The trade-off is a funding fee, which varies by use and down payment and can be waived for some borrowers with service-connected disability.
Imagine a veteran who sells the marital home and wants to buy near Short Pump Town Center. The sale proceeds may cover moving, reserves, and furniture instead of a down payment, and monthly costs stay lower without mortgage insurance. That is an illustration, not a quote.
The common mistake is not checking how an existing VA loan affects remaining entitlement. If the marital home is still financed with your entitlement, the amount available for a new purchase may be reduced until that loan is paid off. If your ex assumed the loan without substituting entitlement, part of yours stays committed there. The Certificate of Eligibility page explains how to request your COE, which shows your entitlement.
- Request your Certificate of Eligibility through VA or have me pull it.
- Check remaining entitlement and compare it with the loan amount you want.
- Coordinate the closing of the new purchase with the sale of the existing home.
Measure remaining entitlement, the funding fee, and the monthly payment against your FHA and conventional alternatives. VA is often the strongest option for those who qualify, but it only wins if the entitlement math works.
7. Use Down Payment Assistance and Renovation Financing
Two tools can stretch a purchase or refinance. Down payment assistance (DPA) lowers cash needed at closing, and renovation financing rolls repair costs into the same loan. Together they suit divorced buyers who have less cash than they expected and a home that needs work.
As an illustration, a divorced buyer purchases a dated home near Crump Park and finances updates in one loan, using a program such as the FHA 203(k) or Fannie Mae HomeStyle. Rather than paying cash for a kitchen later or taking a higher-cost personal loan, the work is included at closing and paid over the term.
The common mistake is assuming prior homeownership disqualifies you from first-time buyer programs. Many programs, including Virginia Housing’s homebuyer offerings, define a first-time buyer as someone who has not owned a primary residence in the past three years, and some programs make exceptions for people who owned only jointly with a spouse. Terms, income limits, and funding change, so confirm current availability before you count on any of it.
- Confirm current program availability, income limits, and purchase price caps.
- Check how the program defines a first-time buyer against your history.
- Layer the assistance with the primary loan and confirm the two are compatible.
Measure the cash needed at closing and the total program cost against its benefit. Some assistance comes with a second lien or repayment conditions, so compare the real cost, not just the headline savings.
How the Seven Options Compare Side by Side
| Option | Best fit | Removes ex from loan? | Key requirement | Main trade-off |
|---|---|---|---|---|
| 1. Refinance | Keeping the home, one spouse qualifies alone | Yes, old note is paid off | Qualify on your own income and DTI | New rate may exceed old rate |
| 2. Assumption | Existing FHA, VA, or USDA loan with a low rate | Only with a written release of liability | Servicer approval of your income and credit | Slow process; entitlement may stay tied up |
| 3. Cash-out refinance buyout | Keeping the home and paying out equity | Yes | Appraisal and LTV within program limits | New rate applies to the entire balance |
| 4. Conventional purchase | Selling and buying new with solid credit | Not applicable | Documented income, sourced down payment | Support income needs history and continuance |
| 5. FHA purchase | Credit damaged by joint accounts | Not applicable | Documented circumstances, low down payment | Long-term mortgage insurance cost |
| 6. VA purchase | Eligible veteran or service member | Not applicable | Certificate of Eligibility and entitlement | Funding fee; existing VA loan can reduce entitlement |
| 7. DPA and renovation | Limited cash or a home needing work | Not applicable | Program eligibility and income limits | Possible repayment terms or added liens |
Divorce Mortgage Questions Glen Allen Homeowners Ask Most
Does a quitclaim deed remove my ex from the mortgage?
No. A quitclaim deed transfers ownership only, and the person who signed the note stays liable to the servicer until the loan is refinanced, paid off, or assumed with a release of liability.
Can I get a mortgage pre-approval in Glen Allen without a hard credit pull?
Yes. Duane Buziak uses the NoTouch Credit Pull, so you can see your options with no credit hit before deciding whether to move forward.
Do I have to refinance immediately after the divorce?
Not always. The deadline comes from your settlement or decree, and some give months. Confirm the date with your attorney, and remember that until the loan changes, both names stay responsible.
Does child support or alimony count as income for a mortgage?
Only if it is documented. Programs generally want a history of receipt, commonly around six months, and at least three years of continuance remaining, so confirm the rule for your loan.
What is a release of liability?
It is a written statement from the loan servicer that a borrower is no longer responsible for the mortgage after an assumption. Without it, the departing spouse can still be held liable.
What is the 2026 conforming loan limit for Henrico County?
The 2026 baseline conforming limit for one-unit homes, which applies in Henrico, is $832,750 according to FHFA. Loans above it fall into jumbo territory with different requirements.
Can I buy a house after divorce if my credit dropped?
Often, yes. FHA guidelines are more flexible, and documenting that late payments stemmed from the separation can help. Duane Buziak reviews your file before recommending a program.
How much equity can I borrow against to buy out my spouse?
Many programs cap a cash-out refinance at 80% LTV, and some options go up to 90%. The amount you can borrow depends on the appraisal, credit, and program rules.
Can a first-time buyer program help if I owned a home with my spouse?
Possibly. Many programs define first-time buyers by whether you owned a primary residence in the past three years, and some make exceptions for joint ownership, so ask before ruling yourself out.
Does GlenAllenMortgage.com work with buyers outside Glen Allen?
Yes. Duane Buziak serves Glen Allen, Short Pump, Innsbrook, Twin Hickory, Wyndham, West Broad Village, Tuckahoe, and Lakeside, and works with buyers across Henrico County.
Start With Your Numbers, Then Choose to Keep or Move
Begin with a soft pull mortgage review of your credit and income. Until you know your score, your DTI, and which support income counts, every other decision is a guess. Once you have those numbers, the choice usually splits in two: keeping the home (Options 1 through 3) or buying new (Options 4 through 7). Keeping works when you can carry the payment alone and the rate trade-off makes sense. Buying new works when selling gives you a cleaner start.
Talk to your divorce attorney before you sign anything, since the settlement language drives the timeline. Then call Duane Buziak at 804-212-8663 and bring the decree.
Ready to experience stress-free mortgage approval with no credit hit and access to hundreds of loan sources at once? Get your free mortgage consultation today and discover why Glen Allen families trust Duane Buziak for personalized guidance and the fastest close times in the area.
