How to Assume a Mortgage After Divorce in Texas

Divorce can be one of life’s most difficult transitions—but understanding your rights under Texas law can make it less overwhelming. When you're untangling a shared life, the family home often becomes the most significant and emotionally charged piece of the puzzle. It's more than just a house; it's a place of memories and stability. In Texas, it is possible for one spouse to assume the mortgage after a divorce, which means taking over the existing home loan and keeping its original terms and interest rate.

This path can be an excellent way to maintain stability for yourself and your children without the cost of refinancing. However, success hinges on one crucial step: you must qualify for the loan on your own. This guide provides a clear, step-by-step explanation of the process, grounded in Texas Family Code principles, to help you feel supported and make informed decisions for your future.

Keeping Your Home After a Texas Divorce

A divorce doesn't just end a marriage; it completely redraws your financial map. The family home is usually the largest piece of that map, representing both a significant asset and a substantial debt. While a Texas divorce decree might award the house to you, that court order doesn't magically remove your ex-spouse's name from the mortgage.

This is where things can become complicated. Even if your ex-spouse is no longer on the property deed, their name on the loan ties your financial fates together. If a payment is late, your credit score can take a hit right along with theirs. This lingering financial liability can be a major roadblock, preventing both of you from securing new loans and truly moving on.

Your Path Forward: Practical Guidance

Making a clear, informed decision about the house is one of the most important steps you can take for your future stability. The main goal is to untangle your shared finances cleanly and legally.

You generally have three main options on the table:

• Assume the Mortgage: You take over the loan as-is, which is a fantastic choice if you're sitting on a low interest rate. You'll need to qualify with the lender based on your sole income, as we'll discuss.
• Refinance the Mortgage: This involves getting a brand-new loan in your name only to pay off the old joint one. It's a very common route, but you could end up with a higher monthly payment if interest rates have gone up.
• Sell the Home: Sometimes, the cleanest break is the best one. Selling the house lets you pay off the mortgage entirely and split whatever equity is left, allowing both you and your ex to start fresh.

One of the most common financial challenges after divorce is deciding what to do with the family home. Approximately 60% of homeowners have a mortgage, and when they divorce, this shared debt must be addressed.

Why the Details Matter

Here's the bottom line: a judge awarding you the house is just the first step. The real work comes from handling the financial and legal details that follow. Taking the time to understand how a mortgage is handled in a Texas divorce is absolutely essential for protecting yourself and securing your new future. This guide is here to give you the practical, real-world advice you need to navigate this process, all grounded in the specifics of Texas family law.

Why Assuming a Mortgage Isn't a Simple Hand-Off

When a judge awards you the house in a divorce, it's easy to think that taking over the mortgage is just a matter of paperwork. You might assume you can just call the lender and have them remove your ex-spouse's name. But in the lender's eyes, it’s not that simple at all.

Think about it from their perspective. The loan they originally approved was based on your combined financial strength—two incomes, two credit histories, and a shared set of debts. When one of you is removed from the equation, the entire financial foundation of that loan has been cracked. Suddenly, their risk has shot up, and they need to protect their investment.

The "Due-on-Sale" Clause: A Lender's Safety Net

Buried in the fine print of most conventional mortgage contracts is a due-on-sale clause. It’s standard language that gives the lender the right to call the entire loan balance due if the property is sold or transferred to someone else. This clause is their protection against the loan being handed off to a new owner who they haven't vetted and who might not be able to make the payments.

Fortunately, there's a major exception for divorcing couples. A federal law called the Garn-St. Germain Depository Institutions Act of 1982 prevents lenders from triggering this clause when a home's title is transferred to a spouse or ex-spouse as part of a divorce settlement.

So, the good news is your lender cannot legally force you to pay off the entire mortgage just because you’re getting divorced and taking over the house. However, that doesn't mean they have to automatically let you assume the loan on your own.

Your divorce decree is a court order that binds you and your ex-spouse, but it doesn't change the contract you both signed with the lender. They still have a right—and a duty to their stakeholders—to make sure the person left on the loan can actually afford it. This is where the real work begins.

Can You Qualify on Your Own?

To officially assume the mortgage, you have to go through a new qualification process, almost as if you were applying for the loan from scratch. This time, however, the lender is only looking at your financial picture.

They’ll put your finances under a microscope, focusing on a few key areas:

• Your Credit Score: Does your individual score meet the lender's current minimum standards? Any recent hits to your credit during the divorce could become a problem.
• Proof of Income: You'll need to show that you have a stable, reliable income that's sufficient to cover the monthly mortgage payment by yourself. Expect to provide pay stubs, W-2s, tax returns, and bank statements.
• Debt-to-Income (DTI) Ratio: This is often the biggest hurdle. Your DTI ratio is the percentage of your gross monthly income that goes toward paying debts (mortgage, car loans, credit cards, child support). If that number is too high, the lender sees you as a risky bet.

Let's look at a common scenario we see in our practice.

Sarah and Tom finalized their divorce, and the decree stated Sarah would keep the house and assume the mortgage. She had a good job, but when she applied to assume the loan, the bank turned her down. Why? The mortgage payment, combined with her car loan and student debt, pushed her DTI ratio over the lender's 43% limit. From the bank's point of view, she was financially overextended and couldn't safely carry the loan alone.

This is a tough reality for many people. It feels unfair, but it's a standard part of the process.

The rules can also have unique wrinkles for different types of loans. For example, military families face specific guidelines, which you can learn about in our guide on what happens to a VA loan after divorce.

Comparing Your Mortgage Options in a Texas Divorce

When the house is on the table, you generally have three paths forward. Each comes with its own set of benefits and challenges, and the right choice really depends on your specific financial situation and goals. This table breaks down what you can expect from each option.

Ultimately, whether you assume, refinance, or sell, the goal is to create a clean separation of this major financial obligation. Thinking through these options early in the divorce process can save a lot of headaches down the road.

The Nuts and Bolts of Assuming a Mortgage in Texas

Divorce is challenging enough. Untangling shared finances, especially the house, adds another layer of stress. If you've decided to keep the family home, you need a clear, step-by-step plan for assuming the mortgage. This isn't just shuffling paperwork; it's a legal and financial process that must be done correctly to protect your future.

Step 1: Your Divorce Decree is Your Starting Point

Before you even think about calling the bank, your first stop is your attorney's office. Your most powerful tool here is the divorce decree. It absolutely must include specific, court-ordered language that legally requires your ex-spouse to cooperate with the mortgage assumption. Without that wording, you could find yourself stuck in a frustrating limbo, unable to move forward and putting your ownership of the home at risk.

Step 2: Making the Call to Your Lender

With a finalized, signed divorce decree in hand, it's time to get in touch with your mortgage servicer—the company you send your payments to every month. Have your loan number and a copy of the decree ready. Your goal is to clearly state that you're initiating a mortgage assumption as laid out in your divorce settlement.

They won't just say "yes" over the phone. Instead, they'll send you a full application package. Be prepared, because it's going to look a lot like the one you filled out when you first bought the house, only this time, you're the only one under the financial microscope.

Step 3: Proving You Can Handle the Payments Solo

Now comes the hard part. The lender needs to be convinced you can afford the mortgage payments all on your own. You’ll need to lay all your financial cards on the table.

You should start gathering these documents now:

• Proof of Income: Get your recent pay stubs, the last two years of W-2s or 1099s, and your most recent tax returns.
• Asset Verification: Print out recent statements from all your bank accounts (checking, savings) and any investment accounts.
• Debt Breakdown: Make a clear list of all your debts—car payments, student loans, credit card balances, and especially any spousal or child support you pay or receive.
• The Divorce Decree: The lender will need to see the official, court-filed document that awards you the property and orders the assumption.

This is often the biggest hurdle. The lender is shifting their risk assessment from a two-income household to just you.

As this shows, proving your single income can cover the debt is the key barrier you have to overcome for the lender to give you the green light.

Step 4: Getting Your Ex-Spouse Off the Loan for Good

Once the lender's underwriters have crunched the numbers and approved your application, they'll draw up the final assumption paperwork. The single most important document in this pile is the Release of Liability. This is the piece of paper that legally severs your ex-spouse's connection to the mortgage.

Your ex will need to sign this. Once that's done, they are officially off the hook for any future payments, and the loan will no longer appear on their credit report. This is a critical step for both of you to truly move on and separate your financial lives.

Step 5: Making the House Officially Yours

Getting the loan in your name is a huge milestone, but you're not done yet. You also have to update the property's title to reflect that you are the sole owner. In Texas, the standard way to do this is with a Special Warranty Deed.

This deed is signed by your ex-spouse, formally transferring their ownership interest in the property over to you. After it's signed and notarized, it must be filed with the county clerk in the county where the property is located. This records the change publicly and makes your sole ownership legally undeniable.

"A divorce decree gives you the right to the house, but the Special Warranty Deed and the Release of Liability are what make that right a reality in the eyes of the law and the lender."

Navigating the financial fallout of a divorce is a challenge everywhere, often shaped by local laws. For example, spouses in the United Kingdom often have to refinance the entire mortgage, which means facing very strict affordability checks on a single income. This can be a massive roadblock, as you can see by exploring global divorce trends and their financial impact.

By tackling these steps one by one, you can ensure a clean transition, protect your credit (and your ex's), and secure your place in the home you worked so hard to keep.

What to Do If You Cannot Qualify for Assumption

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Getting that denial letter from your lender after applying to assume the mortgage can feel like a punch to the gut. You’ve worked so hard to keep the house, and now it seems like a financial technicality is standing in your way. It’s a moment that can bring a wave of disappointment, but I promise you, it's not the end of the road.

This is a common hurdle, not a personal failure. Lenders have very rigid qualification rules, and the financial shift from a two-income household to one is a big deal. The key is to see this not as a dead end, but as a pivot point. You still have excellent, practical options for securing your financial future.

Exploring the Refinancing Alternative

If assuming the loan just isn't in the cards, the next logical move is to look at refinancing. This means getting a brand-new loan in your name only to pay off the original joint mortgage. It’s a clean break that completely severs the financial ties to your ex-spouse, leaving you as the sole owner and borrower.

Yes, this path often means facing current, and potentially higher, interest rates. But it comes with some real advantages. If you have enough equity in the house, you might be able to roll the cost of buying out your ex-spouse's share right into the new loan. It simplifies the whole process and gives you a fresh start with full control.

Leveraging an Owelty Lien in Texas

Here in Texas, we have a uniquely powerful tool that can be a real game-changer in this exact situation: the owelty lien. An owelty lien is a legal instrument specifically designed to help divide real estate equity during a divorce. It essentially lets one spouse "buy out" the other's interest in the property.

Let's walk through a real-world example:

Say your marital home is valued at $400,000, and the mortgage balance is $200,000. That leaves you with $200,000 in equity. If your divorce decree splits that equity 50/50, you owe your ex $100,000 for their half.

An owelty lien allows you to refinance the mortgage for $300,000—that’s enough to pay off the original $200,000 loan and get the $100,000 cash out to pay your ex. This is one of the only ways Texas law allows a cash-out refinance on a primary residence to go above the usual 80% loan-to-value limit.

For many Texans, an owelty lien is the most direct and effective way to satisfy an equity buyout while securing the home in their own name, especially when a simple assumption isn't an option.

Making the Difficult Choice to Sell

Sometimes, the smartest financial decision is also the most emotional one: selling the home. I know it can be incredibly painful to let go of a place filled with so many memories, but selling often provides the cleanest possible financial break for both of you.

Selling the property lets you:

• Wipe out the mortgage completely, eliminating that debt for good.
• Release both you and your ex-spouse from any future liability tied to the home.
• Split the remaining equity, giving you both a chunk of capital to start your new lives.

If you’ve run the numbers and realize you can't realistically afford the home on your own or qualify for a loan, it's crucial to explore all your options if you cannot afford the house after divorce. Making this strategic choice now can save you from future financial heartache and the very real risk of foreclosure. In the toughest scenarios, knowing what to do when facing foreclosure during a Texas divorce can provide critical guidance.

This isn't just a Texas issue. In the Netherlands, for instance, the process is also governed by strict financial hurdles. Dutch mortgage rules often require the spouse keeping the house to prove they can qualify for what is essentially a new mortgage, a major challenge after losing a second income.

Whether you end up refinancing, using an owelty lien, or selling, the goal is the same. You need to make a clear-headed decision that paves the way for a stable and secure financial future.

Legal Documents Are Your Best Defense

After the emotional marathon of a divorce, it's all too easy to let the details slide. You might be tempted to just agree on who gets the house and leave it at that—a simple handshake deal. I've seen it happen, and I can tell you it's a critical mistake. In the eyes of the law and your mortgage company, that verbal agreement means nothing. It’s unenforceable and leaves you dangerously exposed.

The only way to truly protect your financial future is with solid, legally binding paperwork.

This all starts with your divorce decree. It can't just say, "Jane gets the house." It needs to be a court order with teeth. A properly drafted decree will include specific language compelling the mortgage to be assumed or refinanced by a hard deadline, usually somewhere between 90 and 180 days. This language is your greatest leverage; it's what you'll use if your ex-spouse starts dragging their feet or refuses to sign the necessary papers down the road.

Beyond the decree, you absolutely need two other legal instruments to finalize the transfer and cleanly separate this major asset and its corresponding debt. These documents, which are based on the Texas Family Code, are what turn your agreement into a reality and shield both of you from future credit problems and legal battles.

The Special Warranty Deed

First up is the Special Warranty Deed. This is the document that officially transfers your ex-spouse's ownership stake in the house over to you. It’s the legal handshake that passes the title from their name to yours alone.

Once your ex signs it in front of a notary, the deed must be filed with the county clerk in the county where the home is located. This filing creates a public record, officially declaring you the sole owner. Don't skip this. It's the only way to truly make the house yours.

The Deed of Trust to Secure Assumption

While the deed handles ownership, the Deed of Trust to Secure Assumption is all about the debt. This document is a powerful tool designed to protect your ex-spouse and give you a very strong incentive to complete the mortgage assumption process promptly. It's a crucial safeguard for the person moving out, whose name remains on the loan until the lender grants that official Release of Liability.

Here’s the practical breakdown:

• You, as the one keeping the house, sign this document. It effectively gives your ex-spouse a lien against the property.
• This lien gives them the legal power to step in if you fail to make mortgage payments while their name is still attached to the loan. They can take action, which could even include forcing a sale or foreclosing.
• The document also has a built-in off-switch. It clearly states that the lien is automatically removed the moment the mortgage lender officially releases your ex-spouse from all liability.

This document is a critical safety net. It ensures that if you hit a rough patch before the assumption is final, your ex has a real legal remedy beyond just suing you for the missed payments. It's a fair protection we often insist on for our clients who are leaving the marital home.

These three documents—the decree, the deed, and the deed of trust—work together to create a legally sound structure. The divorce decree issues the command, the Special Warranty Deed transfers the title, and the Deed of Trust to Secure Assumption protects the departing spouse during that transitional period. Without all three, your agreement is built on shaky ground, leaving you both vulnerable long after you've gone your separate ways.

Common Questions About Mortgages and Divorce

Going through a divorce brings a tidal wave of financial questions, and the biggest one often centers on the house. It's totally understandable to feel overwhelmed. We've compiled answers to the most frequent and urgent questions we get from clients to help bring some clarity to a tough situation.

What Happens If My Ex-Spouse Refuses to Cooperate?

This is a scenario we see all too often, and it's exactly why the wording in your divorce decree is so important. A handshake deal or a verbal promise simply won't cut it.

Your final decree must include a court-ordered mandate that forces your ex-spouse to sign all the necessary paperwork—like the Special Warranty Deed and any forms the lender requires—by a specific date. If they dig their heels in and refuse, you’re not stuck. Your attorney can file a motion to enforce the decree, bringing the matter back before the judge. The court can then compel your ex to cooperate and may even find them in contempt for ignoring a legal order. This legal firepower is your best bet for keeping things moving.

Will Assuming the Mortgage Hurt My Credit Score?

It's smart to think about your credit. When you apply to assume the loan, the lender will run a hard credit check, which usually causes a small, temporary dip in your score. That's a normal part of any new credit application.

But look at the big picture. That minor, short-term dip is nothing compared to the long-term gain. Once that mortgage is officially yours and yours alone, every single on-time payment you make helps build a solid credit history in your name. It’s a huge step toward real financial independence post-divorce.

The Bottom Line: A small initial dip in your credit score is possible, but successfully managing the mortgage on your own will build a much stronger financial profile for your future.

Are FHA and VA Loans Assumable?

Yes, they typically are. One of the built-in advantages of government-backed loans like those from the FHA (Federal Housing Administration) and VA (Department of Veterans Affairs) is that they are designed to be assumable. The rules are often more straightforward than for a conventional loan.

But "assumable" isn't the same as "automatic." You still have to jump through the lender's hoops. You'll need to formally apply and prove that you can handle the payments on your own income and credit. The good news is that there's an established process for this, which can make the journey a little less bumpy.

How Long Does This Process Take?

This is definitely a marathon, not a sprint, so patience is a must. The timeline for a mortgage assumption can be all over the map. It depends on how responsive your lender is, how complicated your finances are, and how quickly you can get them all the documents they ask for.

Realistically, you should plan for the whole process—from application to final closing—to take anywhere from 30 to 90 days. Because it takes time, the best thing you can do is start the conversation with your lender the moment the ink is dry on your divorce decree. To get a better handle on what's involved, you can read more about mortgage assumption during a divorce. Knowing what to expect makes the wait a little easier.

If you need help navigating divorce, custody, or estate planning in Texas, contact The Law Office of Bryan Fagan today for a free consultation.