Maryland

Can You Refinance on One Income After Divorce?

Yes, if a lender approves the new loan on your income alone. The lender decides. Test it before you fight for the house. In a made-up example, a $425,000 loan costs about $3,536 a month with taxes and insurance. If the lender says no, you need a backup sale date.

By Marc Cormier

Licenses: Maryland #620443 | Virginia #0225175181 | DC #SP98365998 | Berkshire Hathaway HomeServices

27+ years in real estate. 800+ closed transactions.

Certified as a Certified Divorce Real Estate Expert (CDRE) in 2014.

Last updated: October 2, 2026

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Can you refinance on one income after divorce?

Yes, if a lender approves the new loan on your income alone. The lender decides. Nobody else gets a vote on that question, not your spouse, not a court, and not me.

A refinance is a new loan that pays off the old one. In a buyout, the new loan also pays your spouse. The keeping spouse carries the whole payment. Test the loan before you argue about the house.

What do you test with a lender first?

Test the lender's answer before you sign anything. A buyout agreement signed before the loan is approved is a promise you are not sure you are able to keep.

Follow these steps in order:

Write down the home value you plan to use and the mortgage payoff. Use made-up numbers until you have real ones.
Calculate the buyout. Equity is value minus the mortgage. The buyout is equity times your spouse's agreed share.
Add the buyout to the old mortgage. That is the new loan amount.
Call a lender. Ask: "Do you follow the Fannie Mae buyout rule for a divorce, and will you approve me on my income alone?"
Ask for the lender's answer in writing before you sign the buyout.

Ask your lender about rates, fees, credit score minimums, debt limits, and loan-to-value limits. I do not state any of them here. I did not verify them, and each lender sets its own terms.

What does one income have to carry?

It carries the new loan payment, property tax, and insurance every month. Made-up numbers. Keep the $600,000 home, the $250,000 mortgage, and the $175,000 even buyout.

Line	Amount
Home value	$600,000
Current mortgage payoff	$250,000
Equity ($600,000 minus $250,000)	$350,000
Even buyout ($350,000 divided by 2)	$175,000
New loan ($250,000 plus $175,000)	$425,000
New loan as a share of the value ($425,000 divided by $600,000)	70.8%
Principal and interest at a made-up 6.5%, 30 years	$2,686 a month
Property tax	plus $600
Insurance	plus $250
Monthly housing cost ($2,686 plus $600 plus $250)	$3,536
Yearly housing cost ($3,536 times 12)	$42,432

Check the math: $250,000 plus $175,000 is $425,000. $425,000 divided by $600,000 is 0.708. The $2,686 is principal and interest only. The 6.5% rate is invented. Your rate and your lender's terms decide.

Ask the lender one question. Does my one income support $3,536 a month plus my other debts? Add repairs on top. A house has a roof, a furnace, and a water heater.

What is the Fannie Mae buyout rule?

Fannie Mae's Selling Guide treats a buyout of one owner by another, for example in a divorce settlement, as a limited cash-out refinance. Four conditions apply. This is Fannie Mae's rule. Your lender sets its own terms and often adds its own rules.

Fannie Mae Selling Guide section B2-1.3-02 (version dated 10/08/2025) says a limited cash-out refinance allows cash back to the borrower or any other party of no more than the greater of 1% of the new loan amount or $2,000.

Condition	What the Selling Guide says
12 months of joint ownership	The property was jointly owned by all parties for at least 12 months before the new loan disburses. You must document it. The one exception named is a recent inheritance.
A signed written agreement	All parties sign a written agreement that states the terms of the property transfer and what happens to the refinance proceeds.
No proceeds to the keeper	The borrower who takes sole ownership does not receive any of the proceeds.
The keeper qualifies	The party who buys out the other must qualify for the mortgage under Fannie Mae's underwriting guidelines.

Made-up numbers. On the $425,000 loan, 1% is $4,250. The greater of $4,250 and $2,000 is $4,250. The new loan pays the $250,000 mortgage and the $175,000 buyout. You receive $0. That is the shape the rule describes.

Now borrow $20,000 more for a new roof. $20,000 is above $4,250. The roof money pushes the loan outside the limited cash-out category. Ask your lender how it treats a loan like that.

One more point helps a spouse who is not on the deed. The limited cash-out rule requires a borrower on the new loan to be an owner of record at application. It makes an exception when the lender documents that the borrower was legally awarded the property, such as through a divorce. The cash-out refinance section, B2-1.3-03 (12/10/2025), applies a six-month title rule and waives it for inheritance and legal award.

I state nothing here about Freddie Mac, FHA, VA, USDA, jumbo, or portfolio loans. Each has its own rules. Ask your lender how your loan is classified.

What do you bring to the lender?

Ask your lender for its document list first. The lender decides what it needs. Gather the items below now so you are ready.

The deed, and the date both names went on title. Fannie Mae's rule asks you to document 12 months of joint ownership.
The draft written agreement. State who keeps the home, the buyout amount, and where every dollar of the new loan goes.
Your latest mortgage statement and a payoff letter request.
Any appraisal you already have. Ask whether the lender accepts it or orders its own.
Your income records. Ask the lender which ones it wants.
A list of your other monthly debts.
Your divorce paperwork to date. Ask your attorney what you are allowed to share.

What if the refinance fails?

Sell the house on a date you set in advance. A buyout depends on funding. Funding fails when an income drops, an appraisal comes in low, or a lender says no.

Write the backup into the agreement:

The buyout number or the formula.
Written lender approval before the buyout is signed.
A funding deadline.
A backup: if the buyout does not close by the deadline, the house is listed on a set date with one agent. Both owners sign.
Who pays the mortgage, taxes, insurance, and utilities until the buyout closes.

Your attorney writes the terms. Without a backup date, the fight starts over.

What does delay cost?

Delay costs the carrying cost every month. Made-up numbers. The house costs $3,500 a month for the mortgage payment, taxes, insurance, and utilities.

Months of delay	Math	Cost
1	$3,500 x 1	$3,500
3	$3,500 x 3	$10,500
6	$3,500 x 6	$21,000
12	$3,500 x 12	$42,000

Check the math: $3,500 times 6 is $21,000. If two spouses split it evenly, each carries $10,500 over six months. Your agreement says who pays.

A refinance that drags on costs the same as a house that sits unsold. Set a funding deadline.

How does Maryland law treat a transfer of the home?

Maryland Family Law Article section 8-205(a)(2)(iii) addresses a jointly owned home used as the principal residence. Subject to the terms of any lien, the court is allowed to order a transfer to the other spouse if that spouse obtains release from the liens. The court is also allowed to authorize the purchase of the other spouse's interest on terms it sets, or to do both.

A new loan in one name is a way to supply that release. The lender still decides whether it approves you. Spouses are free to agree on their own terms instead. Ask your attorney how section 8-205 applies to your house.

WHAT THIS MEANS FOR YOUR HOUSE

A lender decides whether you qualify on your income alone. Ask before you fight for the house.
In the example, one income carries $3,536 a month before repairs.
Fannie Mae's buyout rule needs 12 months of joint ownership, a signed written agreement, and no proceeds to the keeper.
Section 8-205(a)(2)(iii) ties a court-ordered transfer to release from the liens.
Put a funding deadline and a backup sale date in the agreement.
Ask your attorney and your tax professional before you sign.

Where this goes wrong

I have seen this mistake before. A spouse promises to keep the house, signs a buyout, and then asks a lender. The lender says no. The buyout fails, the carrying costs keep running, and the argument starts again.

Signing a buyout before the lender approves. If the loan fails, you owe a payment you are not able to fund.
Testing only the loan payment. Taxes, insurance, repairs, and your other debts count too.
Borrowing extra cash in the same loan. $20,000 is above the $4,250 limit in the example.
Not documenting 12 months of joint ownership. Pull the deed early.
No signed written agreement on where the loan money goes.
No funding deadline and no backup sale date.
Assuming one lender's answer fits every loan type. Ask about yours.

This is where people usually get hurt. They fight for the house first and price it second.

Local note for Montgomery County: The Montgomery County Circuit Court runs a Family Law Self-Help Center. It is a free walk-in clinic staffed by attorneys, in the South Tower, First Floor, Room 1500. It gives general legal information or limited legal advice on divorce, custody, and related matters. You still pay case fees and costs. Source: https://www.montgomerycountymd.gov/circuit-court/services/family-law-self-help-center

If keeping the home does not work, here is how a divorce sale runs.

Questions about refinancing on one income after divorce

Q1. Can I refinance on one income?

Yes, once a lender approves a new loan on your income alone. Nobody else decides that. Ask the lender what it needs, then get its approval in writing before you sign the buyout. A failed loan means a failed buyout, so your agreement needs a backup sale date. Your attorney writes the terms.

Q2. Can I afford to keep the house?

Test your single income against the whole monthly bill. A made-up $425,000 loan at 6.5% over 30 years carries principal and interest of $2,686. Property tax of $600 and insurance of $250 bring the monthly housing cost to $3,536. Repairs and your other debts come on top. Ask a lender whether your income supports it.

Q3. Can I buy out my spouse without it being a cash-out refinance?

Start by asking your lender which loan type applies. Fannie Mae's Selling Guide treats a buyout of one owner by another, for example in a divorce settlement, as a limited cash-out refinance. The home must have been jointly owned for at least 12 months. All parties sign a written agreement on the transfer and the proceeds. The owner who keeps the home gets no proceeds and qualifies for the mortgage. Other loan types have their own rules.

Q4. How do I get my spouse off the mortgage?

Compare three routes with real prices. One is a sale that pays off the loan. Another is a refinance into one name. The third is a request to your lender about taking over the existing loan, if it offers that. The lender approves or rejects each route. Study your loan papers, and ask a lender before you promise a buyout. If keeping the home does not work, here is how a divorce sale runs.

Q5. Can the court transfer the house to one spouse?

Ask your lender about the loan and your attorney about the deed. Under section 8-205(a)(2)(iii), a court is allowed to order a jointly owned principal residence transferred to the other spouse who obtains release from the liens, authorize a buyout on terms it sets, or do both. Lien terms apply.

Q6. Can I keep the house if my spouse wants to sell?

Two conditions apply. You buy out your spouse's share, and a lender approves a loan on your income alone. The price is your spouse's share of the equity. Ask the lender first, since its answer settles the matter fast. Without approval you need another plan, and a sale is the usual alternative.

Q7. What does it cost to carry the house while it sits unsold?

Mortgage, taxes, insurance, and utilities add up every month the house sits. At a made-up $3,500 a month, 3 months cost $10,500, 6 months cost $21,000, and 12 months cost $42,000. Your bills decide your real number. Total them before you list.

Q8. What if the refinance does not close?

Your agreement needs a plan for a failed refinance. A buyout depends on funding. Funding falls apart when income drops, an appraisal lands low, or a lender declines. Set a funding deadline and a backup date on which the house lists. Both owners sign. Six months of waiting at a made-up $3,500 a month costs $21,000.

Do you need a divorce attorney?

You should have your own. I am a real estate agent. I do not give legal advice, and I do not work for one spouse against the other.

I am not affiliated with any law firm. I do not recommend one attorney over another. Your spouse needs their own attorney, not yours.

If you need to find one, start with these bar association resources:

Links open in a new tab.

What an attorney handles	What I handle
Who gets the house and the money	The value of the house
The marital settlement agreement	The net sheet
Court orders that affect the sale	Listing, showings, offers, and closing
Custody, support, and everything outside real estate	A written record of every showing and decision

General information only. Not legal, tax, or financial advice. The referral services are independent of me. I do not guarantee any attorney's work or results.

About the Author

Marc Cormier