Steps of Buying A House While Going Through Divorce

Buying a Home While Going Through a Divorce

The breakup of a marriage is an emotional time, and while these emotions will fade, you could be living with the financial consequences for a lot longer. During the divorce, marital assets and debts must be divided, and things can get complicated.

When there is a mortgage involved difficult decisions might have to be made, and uncomfortable compromises reached. But you still need somewhere to live, so can you buy another home?

Your Current Home: Property Division

If you have a mortgage with your divorcing spouse, this must be dealt with first. If you know you both want to move on and move out, the home can be sold. But if you or your ex still wants to live in the home, it can be more complicated.

When one person wants to remain in the home, the deed can be retitled or reassigned, but refinancing is more common. The divorce itself doesn’t remove responsibility for the mortgage, and the home usually either has to be sold or refinanced to change this.

When one party wants to buy out the other, the divorce decree or legal separation agreement is required to show that the property has been awarded by the court. This should allow a cash-out refinance, releasing the equity to let the other party buy a new house.

I reached out to Bill Gassett, owner of Maximum Real Estate Exposure to get his thoughts on property division. Bill is an expert on selling a home during divorce with many years of experience under his belt.

Luke, one of the first things divorcing couples must understand is how the laws work in their state. You can either be located in an equitable distribution or community property state. In a community property state debts and assets are split equally.

On the other hand, equitable distribution states divide assets based more on what is fair with multiple determining factors. For example, each spouse’s needs, what they put into the marriage, and how long the couple was together.

Knowing which type of state you’re in, couples can then work on an asset split. Typically, couples will put together a list of all their assets and debts.

Assets include real estate, bank accounts, investments, and personal property. Debts could include mortgages, other loans, and credit cards.

The goal should be to settle quickly without letting a judge decide. Over the years, I have witnessed far too many couples fighting for a while before coming to a resolution. The only ones who make out in this circumstance are the attorneys.

Is It a Good Idea to Buy a House During Divorce?

While it is possible to purchase a new home during your divorce, it can cause you more problems than a typical home purchase. How much of a problem it could be depends on where you live.

If you live in a state like California, the new home will become community property. Even though the new home will be where you live and only purchased by you, your ex will have part ownership of it because you are still married. Despite one spouse not contributing to the cost or planning to live in the home, they will automatically have an interest in it when you buy before the divorce proceedings are concluded.

Almost any property as well as debts acquired while still married will become community property. There can be exceptions, like inheritance or gifts, but even those can become marital property before the marriage is officially over.

When you still have a good relationship with your spouse, it is possible to come to an arrangement that prevents this issue. The ex’s interest in the property can be released with a quitclaim deed or an interspousal transfer deed.

Community (Marital) Property States

If you live in one of the following marital property states community property laws apply:

  • California
  • Texas
  • Washington
  • Wisconsin
  • Louisiana
  • Arizona
  • Nevada
  • New Mexico
  • Idaho

If these laws affect you, you might need approval from the court to purchase your new home. We recommend you discuss community property laws with a divorce attorney.

You also need to remember that your partner’s debt will remain yours, while you are still married. If they have old debts or take on new ones, these will continue to affect your credit. Their debts can increase your debt-to-income ratio, reducing your chances of getting a home loan and making it less likely that your loan will have a competitive interest rate if approved.

Quitclaim and Interspousal Transfer

If you are married in a state with marital property and you want to buy a home, a quitclaim deed or interspousal transfer deed will need to be signed. If you are on good terms, this may not be a problem. However, if your spouse wants to be stubborn you could find your new home is partly owned by your ex.

The judge could potentially find that half of your new home is owned by your separated spouse. So if you can’t get a concession from your spouse to sign a quitclaim deed transferring the new property, you’re going to be better off waiting before you buy.

Dividing Your Finances

Whether you have joint accounts or not, you should separate your finances as much as possible before you consider purchasing a home.

When you apply for a home loan, the lender will look at your debts. While you might not have any serious outstanding debts, perhaps the same can’t be said for your spouse. But if they have a loan, you may still be on the loan agreement and responsible for it. While you may never have made any payment toward it, the loan will affect your home loan application.

During divorce proceedings, a separation agreement can be used to document any outstanding debts and who they are assigned to. The court can assign debt to one of the parties during the divorce process and this will need to be added to a separation agreement before the divorce decree. This can prevent your ex’s debts from causing you problems when you apply for a new home loan before the case is settled.

When you separate your finances, your financial situation will become clearer and you will have a better understanding of the home loan you can afford after the divorce is final.

If you live in a marital property state, your income could be considered community income. This will make it seem like you have less income to spend on a home, reducing the loan available from the lender. And using community income, even though it is yours, could cause further problems before the divorce is settled. 

Temporary Orders

If the court issues a directive that limits your use of finances during the divorce, you may not be able to purchase the home you want. These temporary orders have to be followed otherwise you can seriously hurt your divorce case.

Preparing to Buy a House During a Divorce

If your former partner has agreed to sign a deed allowing you to buy, or the judge has given permission, and your finances have been divided, you can begin to plan your home purchase.

You will need to have the money for a down payment and the other costs involved when buying a home. Your credit score is also something you need to consider, with better scores normally offering better terms and interest rates. 

Choosing the type of mortgage which is right for you is an important step. Government-backed loans from the FHA, VA, and USDA offer many advantages, like low or zero down payments and more lenient loan qualification requirements. If you have good credit and a stable job, a conventional loan could be a better option.

Selecting your lender isn’t necessarily easy, but your choice is one you could have to live with for a long time. Making sure the type of loan and the lender are right for you will affect your finances for years to come.

Once you have a lender, you can get pre-approved for the loan. Prequalification might also be available, though it doesn’t offer the same checks that preapproval does. Prequalification offers an estimate of what you will be able to borrow, but preapproval offers a more in-depth look at your finances that includes a credit check.

Your finances are going to change as your situation changes post-divorce. If you are moving, you will have different expenses, and you could be changing jobs too. If there are alimony or child support payments involved in the settlement, this will also factor into the home loan you can afford.

Credit Score

Your credit score might not remain the same following your divorce. Your financial situation will change and it could affect your credit score. Before you apply for your new home loan, you should make sure your credit score is as good as it can be.

A better credit score will mean you get better terms and pay less interest on your home loan. If you don’t already know what your credit score is, you can check this once per year with each of the three main credit bureaus for free. This gives you access to your credit report to help you find problems and show you what you need to do to improve. 

Following your divorce, you may find that there are errors in your credit report that could be harming your score. There are also things you can do to improve your credit score, like making sure you make payments on time, reducing your credit utilization, and not closing old accounts even if you don’t use them anymore.


The lender looks at your debts and compares them to your gross income to judge how much you can afford to spend on mortgage repayments. The amount of debt allowed by the lender depends on the type of home loan and your credit score.

Down Payment

Government-backed loans from the VA and the USDA don’t necessarily require a down payment, though you may want to save for one anyway. Conventional loans require a minimum of 3% down, and with the FHA it is 3.5%.

If you are going through a divorce, saving money can be tricky. If your income is still considered community income, when you are in a marital property state, you could face issues.

Can I Get Preapproved for a Mortgage Before My Divorce Is Finalized?

Preapproval for a new mortgage is possible while you are going through a divorce. Your lender will only use your income when assessing your application. However, this situation may change during the divorce if alimony or child support is awarded.

Any changes in your income will affect your debt-to-income ratio and your ability to pay a mortgage. This may alter the size of the loan offered by the lender.

Does Divorce Affect a Mortgage Application?

When applying for a mortgage many lenders will want to see a formal separation agreement. Child support or spousal payments may also affect the amount of money you can borrow to buy your home. This could increase your debt or your income, affecting your debt-to-income and the amount you will qualify for.

The separation agreement should state the amount of support or alimony awarded, and how long it will be paid. Without a separation agreement, or if it doesn’t specify these details, the lender may not consider it to be income.

How Much Equity Is My Ex Entitled To?

If you have equity in your home, it can be useful to find out how much is available if you want to purchase a new home. There are a couple of options:

The difference between the current value and the outstanding loan balance, plus any other liens, is the equity that will be divided as part of your divorce.

The exact equity split will decided during the divorce settlement, though the split is often 50-50 unless there is proof you solely paid for or were gifted property. However, if you are in a community property state, this won’t apply and the equity will be split evenly.

Seek Legal Advice Before Making Serious Financial Decisions

Divorce law varies depending on your location, and everybody’s situation is slightly different, so talking to your lawyer before you decide to buy is very important.

Your divorce lawyer will be able to advise you on how to financially separate during the divorce and make sure the purchase of a new home isn’t tied to your ex’s finances. If you follow their advice, it should prevent your new home from becoming entangled in the divorce.

An attorney should be consulted before you make any big financial decisions during your divorce. There could be considerations that you aren’t aware of that you might regret later.

Summing Up How To Buy a House During a Divorce

Homebuying can be a complicated process at the best of times, and when you are going through a divorce you probably aren’t having a great time.

While it is possible to buy a house before the divorce is finalized, you need to be aware of the possible complications and consult your attorney before making decisions. But if you have your finances in order, and the judge allows it, you can buy a new home and begin a new chapter of your life.

Buying a Home While Going Through a Divorce

Learn about buying a house during your divorce

About the author: This article was written by Luke Skar of As the Social Media Strategist, his role is to provide original content for all of their social media profiles as well as generate new leads from his website.

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Filed under: Conventional Loans

Luke Skar

Luke Skar is the web developer and content strategist for Currently working for NRL Mortgage which serves 47 states including Wisconsin, Illinois, Minnesota, and Florida. Guided by his 20-plus years of various mortgage marketing experience, Luke provides top-quality SEO services, effective social media management, and web development and maintenance. Luke’s career in the mortgage industry began back in 2001, as a loan processor. After becoming a loan officer for a number of years, Luke now runs To ensure that all the information he posts is fresh, accurate, and up-to-date, Luke relies on the knowledge which his years of dedication to keeping up with the constant change that the mortgage industry provides.


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