"Can I keep the house?" When someone going through a divorce calls us, that's usually one of the very first questions, and it's a completely fair one. After more than 20 years of Long Island mortgages, here's our honest answer: very often, yes. But keeping the house almost always means refinancing it into your own name and buying out your ex's share of the equity, and the way your settlement is written can matter just as much as your credit score. Let's walk through how a spousal buyout refinance works, how you qualify on one income, and the Long Island details worth getting right.
What Is a Spousal Buyout Refinance?
Most married couples on Long Island own the house together and owe the mortgage together. When one of you keeps the home, two things usually need to happen: your ex comes off the deed, and your ex comes off the mortgage. A spousal buyout refinance handles the second part and pays for the first. You take out a brand new refinance loan in your name alone, and that loan does three jobs at closing:
The result: you own the house on your own, and the mortgage is yours alone. Your ex walks away with their equity and without a loan they no longer live under.
The Deed vs. the Mortgage: The Part People Mix Up
This one trips up a lot of people, so it's worth slowing down on. The deed is ownership. The mortgage (technically the note behind it) is the debt. They're separate, and fixing one doesn't fix the other.
Why the Way Your Buyout Is Structured Matters
Here's the detail that surprises people most. Loan programs treat an equity buyout differently, and the difference decides how much of your home's value you're allowed to borrow against.
Fannie Mae (the conventional loan world) treats buying out a co-owner as a limited cash-out refinance, the same category as a plain rate-and-term refinance. That generally allows a higher loan-to-value ratio (LTV) on a one-unit primary home, typically up to 95% of the appraised value. Freddie Mac calls it a special purpose cash-out refinance and applies its cash-out LTV limits, which are lower. FHA generally handles an equity buyout as a cash-out refinance, capped at 80% of the home's value, with at least 12 months of owner-occupancy.
| Fannie Mae | Freddie Mac | FHA | |
|---|---|---|---|
| How a buyout is treated | Limited cash-out refinance | Special purpose cash-out refinance | Cash-out refinance |
| Typical max LTV (1-unit home) | Generally up to 95% | Cash-out limits, typically 80% | 80% |
| Ownership history | Jointly owned at least 12 months | Jointly owned at least 12 months, used as primary residence | Owned and occupied 12 months |
| Written agreement | Required, signed by all parties | Required, signed by all parties | Settlement or decree documents the buyout |
| Cash to the spouse keeping the home | None | None | Per cash-out rules |
What does that mean in real life? If you have plenty of equity, almost any route works. If equity is tighter, the Fannie Mae buyout route can be the difference between keeping the house and having to sell. Every lender layers on its own rules, so this is exactly where comparing several of them pays off.
The Buyout Requirements, in Plain English
For the conventional buyout routes, Fannie Mae and Freddie Mac look for the same core items. Your attorney will recognize most of these, which is why it helps to share this list early.
This estimator is interactive in the live version of this article. Scan the QR code at the top to try it with your own numbers.
Illustration only. Equity here is simply home value minus the mortgage balance and other liens; your settlement may define it differently. Actual loan eligibility, maximum LTV, and costs depend on the loan program, lender, appraisal, credit approval, and property. This is not a loan offer or legal advice.
Qualifying on One Income
This is usually the real hurdle, especially with Long Island property taxes built into the payment. The new loan is underwritten on your income alone, so your debt-to-income ratio carries a lot of weight. A few things that help people who aren't sure they'll make it:
Support You Receive Can Count
Alimony, child support, or separate maintenance can be used as qualifying income when it's documented in your agreement or decree, you've received full, regular payments for at least six months, and it's set to continue for at least three years.
Check when child support ends. Kids aging out within three years can limit it.Support You Pay Counts Against You
If you're the one paying, child support is treated as a monthly obligation, and alimony is either counted as a debt or subtracted from your income. It's worth knowing the number before you agree to it.
The Six-Month Clock Matters
Support income usually needs a six-month track record. If your agreement is brand new, the timing of your refinance can decide whether that income counts yet.
Debts Get Divided on Paper First
If your settlement assigns a car loan or credit card to your ex, lenders will want to see that in writing, and sometimes proof that your ex is the one paying it.
Timing: Talk to a Lender Before the Settlement Is Final
The most expensive mistake we see is agreeing to a buyout number and a deadline before anyone checks whether the refinance can actually happen. Lenders need the signed agreement to close, but you want the mortgage math done while the terms are still being negotiated. Here's the order that tends to work best:
The Long Island Detail: New York's Mortgage Recording Tax and a CEMA
New York charges a mortgage recording tax when a new mortgage is recorded. In Nassau and Suffolk, the total rate is 1.05%, and on a one- or two-family home the borrower's share is 0.80% (the lender covers the other 0.25%), minus a small $30 credit. On a refinance, that can be a real line item.
A CEMA (Consolidation, Extension and Modification Agreement) can shrink it. Instead of paying off and cancelling the old mortgage, the existing mortgage is assigned to the new lender and combined with the new money. Tax is generally owed only on the new money, which in a buyout is roughly the equity payment plus costs, not the whole loan.
Not every lender offers a CEMA and your current servicer has to cooperate, which can add fees and time. It's still one of the first things we check on any Long Island refinance, buyout or not.
When a Refinance Isn't the Right Answer
Sometimes the numbers just don't stretch far enough, and that's okay. It's better to know early. Options people and their attorneys often look at:
Your ex takes a larger share of retirement accounts or other assets in exchange for a smaller equity payment, which lowers the loan you need.
The settlement gives you a set window, sometimes tied to the kids' school years, to refinance later, while spelling out who pays what in the meantime.
Some people ask about using a HELOC to pay their ex and keep the existing first mortgage. The catch: your ex's name usually stays on that original mortgage, so it doesn't give them a clean release on its own.
If keeping the home would stretch you too thin, selling and splitting the proceeds can be the healthiest financial move, and a fresh start somewhere else on the Island is very doable.
A Quick Word on New York Divorce Law
New York is an equitable distribution state. Under Domestic Relations Law Section 236, marital property, including the marital home, is divided fairly based on a list of factors, which doesn't automatically mean 50/50. How your equity is divided is a legal question for you and your attorney, not a mortgage one. Our job is to show both of you what the financing can support so the agreement you reach actually works at the closing table. The New York State Courts divorce resources are a good neutral starting point.
Why a broker helps here. Buyout rules and overlays vary from lender to lender, and a few percentage points of allowed LTV can decide whether you keep the house. Because Coltrain shops a range of wholesale lenders, we can compare the Fannie Mae buyout route, other conventional options, and FHA side by side, and give your attorney clear numbers to work from. We keep these conversations confidential and low-pressure.
Want to know how big a buyout your income can support?
Can I keep the house in a divorce if the mortgage is in both names?+
Usually, yes, if you can qualify for a new loan on your own. Most people refinance the home into their name alone, which pays off the joint mortgage and releases their ex from the debt. The refinance can also pay your ex their share of the equity at closing.
Does taking my ex off the deed remove them from the mortgage?+
No. The deed is ownership and the mortgage is the debt. Your ex stays liable on the existing loan until it's refinanced or the lender formally releases them, for example through an approved assumption.
How much can I borrow to buy out my spouse?+
It depends on the loan program. Fannie Mae treats a documented equity buyout as a limited cash-out refinance, which generally allows up to 95% of the home's value on a one-unit primary residence. Freddie Mac applies its cash-out limits, and FHA caps cash-out refinances at 80% of the value. Lender overlays can be stricter.
Can alimony or child support help me qualify?+
Yes, when it's documented in your agreement or decree, you've received full, regular payments for at least six months, and it will continue for at least three years after you apply. If you pay support, it counts as an obligation against your income instead.
When should I talk to a lender during a divorce?+
Before the settlement is final. Lenders need the signed agreement to close the refinance, but running the numbers while terms are still being negotiated helps make sure the buyout amount and deadline are ones the loan can actually meet.
Is there a way to reduce New York mortgage tax on a buyout refinance?+
Often, through a CEMA. The existing mortgage is assigned to the new lender and consolidated with the new money, so the mortgage recording tax is generally owed only on the new money rather than the full loan. It requires cooperation from your current servicer and isn't offered by every lender.
Program guidelines are based on published Fannie Mae, Freddie Mac, and HUD requirements as of October 2026 and are subject to change. All loans are subject to credit approval, underwriting, appraisal, and property eligibility. This article is for educational purposes only. It is not legal or tax advice and is not a commitment to lend. Please consult your attorney about your divorce and property settlement. Coltrain Mortgage is a mortgage broker; all loans are arranged through third-party lenders. Equal Housing Opportunity.
- Fannie Mae Selling Guide, B2-1.3-02, Limited Cash-Out Refinance Transactions
- Fannie Mae Selling Guide, B3-3.4-02, Alimony, Child Support, Equalization Payments, or Separate Maintenance
- Freddie Mac Single-Family Seller/Servicer Guide, Section 4301.6, Special Purpose Cash-Out Refinance Mortgages
- U.S. Department of Housing and Urban Development, Mortgagee Letter 2019-11, Cash-Out Refinance Maximum LTV
- 12 U.S.C. 1701j-3, Garn-St Germain Act, due-on-sale exemptions
- Suffolk County Clerk, Mortgage Tax; NYS Department of Taxation and Finance, Mortgage Recording Tax
- Freddie Mac Guide, Section 4101.11, New York Consolidation, Extension and Modification Agreement (NY CEMA)
- New York Domestic Relations Law, Section 236, Special controlling provisions (equitable distribution)
