Can I Get a Mortgage with an 80% Loan-to-Value (or more) for a Divorce Settlement Buyout?
The short answer is yes.
Many homeowners are surprised to learn that there are special mortgage programs available to help individuals keep their home after a separation or divorce. While a traditional refinance is generally limited to 80% of a home’s value, a Spousal Buyout Mortgage may allow qualified borrowers to access financing of up to 95% of the home’s appraised value.
If you’re navigating a separation and want to remain in your home, this program may provide a solution.
What Is a Spousal Buyout Mortgage?
A Spousal Buyout Mortgage is a specialized insured mortgage program designed to help one spouse purchase the other spouse’s interest in the family home following a separation or divorce.
Rather than selling the property, the remaining spouse may be able to refinance the mortgage, remove the departing spouse from title, and obtain additional funds needed to complete the equity settlement.
This program is available through Canada’s mortgage insurers, including:
- CMHC
- Sagen
- Canada Guaranty
How Is This Different From a Regular Refinance?
Under normal circumstances, Canadian lenders typically limit refinances to a maximum of 80% loan-to-value (LTV).
However, when the purpose is to facilitate a documented separation agreement or divorce settlement, mortgage insurers may permit significantly higher financing.
Mortgage Scenario
Maximum Loan-to-Value
Traditional Refinance
Up to 80%
Spousal Buyout Program
Up to 95%
This additional flexibility can make the difference between keeping and selling the family home.
Example of a Divorce Settlement Buyout
Let’s assume:
- Home Value: $700,000
- Existing Mortgage: $450,000
- Maximum Financing Available (95% LTV): $665,000
Potential funds available:
$665,000 – $450,000 = $215,000
In this example, up to $215,000 could potentially be used toward an equalization payment or equity buyout as outlined in a separation agreement.
What Are the Requirements?
To qualify, borrowers will typically need:
– A Signed Separation Agreement
Lenders and mortgage insurers generally require a legally executed separation agreement or court order outlining the terms of the property settlement.
– Sufficient Income to Qualify
The spouse retaining the property must qualify for the mortgage independently or with an approved co-borrower.
– Property Appraisal
A current appraisal is usually required to establish the home’s market value.
– Owner-Occupied Property
The home generally must be owner-occupied and meet mortgage insurer eligibility requirements.
– Mortgage Default Insurance
Since financing exceeds 80% loan-to-value, mortgage default insurance premiums will apply.
Why Choosing the Right Lender Matters
Not all lenders and mortgage insurers treat divorce and separation files the same way.
Some insurers may have greater flexibility regarding:
- Equalization payments
- Legal fees
- Separation-related debt obligations
- Existing mortgage penalties
- Documentation requirements
This is why working with an experienced mortgage professional can be especially valuable during a separation.
Can I Keep My Home After a Divorce?
Every situation is unique, but many homeowners are surprised to learn they may have more options than they initially thought.
A Spousal Buyout Mortgage can help qualified borrowers:
- Remain in their family home
- Avoid a forced sale
- Access equity needed for a settlement
- Simplify the transition after separation
Let’s Review Your Options
If you’re going through a separation or divorce and want to explore whether a Spousal Buyout Mortgage could work for you, I’d be happy to review your situation and explain your options.
Every case is different, and obtaining professional mortgage advice early can help you make informed decisions during an already challenging time.
Sincerely ~ Janet Hong
Mortgage Broker | Alberta & Newfoundland and Labrador
📞 Contact me at Janet Hong Mortgages today for a confidential consultation and personalized mortgage strategy.
