Buyout · Answer
Can I keep the house and buy out my spouse?
The short answer
You can if you agree on a price and a share, qualify for a loan in your own name, and can carry the house alone. A buyout usually means refinancing to pay your spouse their share and take them off the old loan. Fannie Mae can treat that as a limited cash-out refinance if the home was jointly owned at least 12 months and there's a written agreement.
- 01
What a buyout involves
A buyout has four moving parts. You agree on what the house is worth, you agree on your spouse's share of the equity, you get a new loan that pays off the old one and pays them that share, and they sign the house over once the refinance closes. Each step depends on the one before it, and the refinance is the step the two of you don't control.
The price comes first. How is a buyout price set? covers the methods, and your share is decided in the divorce case under ORS 107.105(1)(f).
- 02
The Fannie Mae rule
Under the Fannie Mae Selling Guide, a lender can treat a divorce buyout as a limited cash-out refinance if the home was jointly owned for at least 12 months before the new loan, there's a written agreement covering the transfer, and the borrower keeping the home receives none of the proceeds. Not every loan is a Fannie Mae loan, and every lender applies its own standards on top.
Ask a lender early. Before you sign a settlement.
- 03
Run the numbers honestly
Wanting to keep the house is normal, and it's worth testing against one income. The keep or sell tool compares the monthly cost of staying with what each of you walks away with from a sale. Remember that you'd pay the costs of sale later anyway, if you sell someday.
There's a tax angle too. A married couple filing jointly can exclude up to $500,000 of gain on a main home, while a single seller can exclude up to $250,000, per IRS Publication 523. Ask your CPA what that means for you. If a refinance looks out of reach, see what if I can't qualify to refinance alone?
- 04
Write down the fallback
Once you've agreed, the details matter. The settlement should state the price, the share, a deadline for the refinance, and what happens if the refinance doesn't close by then, such as listing the house for sale. That last clause protects both of you. Without it, the spouse leaving can be stuck on the loan indefinitely, and the spouse staying can be stuck with no clear next step. Your attorneys write it. If you end up listing instead, I'd work for the sale for both of you.
Confidential consult
Your situation, specifically.
Tell me where things stand. I’ll tell you what the sale could look like for your situation, and what to ask your attorney first.