When going through a divorce, one of the most challenging aspects can be deciding what to do with the family home. Often, one spouse may wish to keep the home, which leads to the need for a house buyout. A house buyout is when you buy out your ex-spouse's share of the home equity, and though it's common, it's just one of several options.
When considering a house buyout, it’s essential to calculate equity by factoring in the current market value of the property, the outstanding mortgage balance, and any closing costs. It’s a good idea to first talk to an experienced local real estate agent before deciding. An expert realtor can help you explore all your options, provide an unbiased home valuation, and sell your home (if that’s what you decide).
Clever can help you find a great local realtor with experience helping divorced couples — and it offers additional benefits, like built-in savings on realtor fees when you sell.
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Divorce buyout calculator
Want to see how calculating your divorce house buyout would work in your specific situation? Use our divorce buyout calculator above to get an estimate — but consult with your lawyer for a more accurate number.
Appraised value: Enter the current market value of your home, based on a professional appraisal.
Tip: If you’re unsure of the exact amount, you can use an online home value estimator for a rough idea. For a more accurate estimate, it's best to get a free comparative market analysis (CMA) from a top local realtor.
Mortgage balance: Enter the remaining amount owed on your mortgage. You can find this on your most recent mortgage statement or by contacting your lender.
Total equity: This is calculated as your appraised value minus your remaining mortgage balance. It shows how much of the home’s value you actually own after accounting for any outstanding debt.
Buyout payment to spouse: This is the amount one spouse needs to pay the other to buy out their share of the home's equity. It’s typically calculated by dividing the total equity in the home by two, assuming a 50/50 ownership split. For different ownership percentages, the calculation would adjust accordingly.
Remember that this calculation doesn’t account for potential home sale costs, such as realtor commissions and closing costs, which could reduce the actual amount of equity available. It also doesn’t account for any financial contributions you or your spouse made to increase the property’s value, such as renovations or upgrades.
How is a home buyout calculated in a divorce?
A buyout starts with fair market value, then subtracts the mortgage payoff to get total equity. An online home value estimate tool can give you a general idea of what your house is worth, but this won't be exact.
From there, apply the agreed-upon ownership percentage (often 50/50, but settlements may adjust for separate property contributions, improvements, liens, or state law).
Quick formula
- Equity = Current value – Mortgage payoff (– hypothetical selling costs, if modeling a sale scenario)
- Partner’s share = Equity × ownership %
Example
- Value: $400,000
- Mortgage payoff: $200,000
- Total equity: $200,000
- 50% share: $100,000 (amount owed to the departing spouse)
Courts/settlements can modify this number. In community-property states, the starting point is usually a 50/50 split. In equitable-distribution states, a judge can weigh factors like who paid what, improvements, or separate funds. Talk with your attorney to confirm the right inputs before relying on a calculator estimate.
| Home's appraised value | $400,000 |
| What you owe on mortgage | $200,000 |
| Total equity for both spouses | $200,000 |
| Equity for each spouse | $100,000 |
To determine how much you must pay to buy out the house, add your ex's equity to the amount you still owe on your mortgage.
Using the same example, you’d need to pay $300,000 ($200,000 remaining mortgage balance + $100,000 ex-spouse equity) to buy out your ex’s equity and become the house’s sole owner.
What are my options with our house after a divorce?
After a divorce, you have a few options for splitting up your home.
Buy out your ex-spouse's equity
If you and your ex-spouse owned the home together, you'll likely both have equity in the home. If you bought the house together, you'll typically split the equity equally. When you buy out their equity, you'll pay your ex for their portion of the home.
Your ex-spouse's equity might depend on your state and whether you owned the house before you got married, which will affect the equity split. Consult a divorce attorney to help you sort this out.
If you’re considering a buyout, finding an experienced local real estate agent can be invaluable. A knowledgeable agent can help you evaluate your options and make an informed decision.
Refinance the mortgage to buy out their portion of the home
If you don't have the money to buy out your ex-spouse, you can potentially refinance the mortgage. A cash-out refinance allows you to refinance your existing mortgage for more than the amount owed, enabling you to use the difference to buy out your ex-spouse's equity. By refinancing, you can cash out the equity you've built up and use it to buy out your ex-spouse's portion of the house.
Refinancing also eliminates your ex-spouse's name from the mortgage, meaning they won't be held legally responsible for making payments. This is why you'll often want to refinance even if you have the money ready to buy out their equity.
If you refinance, you'll need to show the mortgage lender that your income alone is high enough to qualify for the mortgage. If your income isn't, you'll probably have to sell the home, unless you can come to another arrangement.
Even if you do qualify for a new loan, don't forget to calculate the cost of maintaining the home. While things like cutting the grass and paying the utilities might seem inexpensive, they add up, especially when you're paying for them yourself.
Sell the home and split the proceeds
If neither you nor your ex-spouse has an attachment to the property or the capital to buy each other out, it's often best to sell. Before selling, it's important to get the property valued to accurately calculate the equity and ensure a fair split of the proceeds. That way, you can divide the net equity and enjoy a cleaner split.
Even if you don't want to sell, if you can't agree on splitting up the house, the court may order you to sell it as a factor in your divorce proceedings. This is especially common in a community property state, where it's the law to split everything 50/50.
Steps to take with your home when getting divorced
Determine the best way to sell
If you and the property’s co-owner decide to sell the house, you have several options. If you must sell quickly (in a week or less), a cash buyer is often the fastest option. But we still recommend consulting a real estate agent.
A realtor will work with you to appraise your property and determine how much it could sell for on the open market. If you're pressed for time, you can ask your agent to present you only with cash offers from vetted, local buyers.
You'll likely sell for a higher price when you work with an agent, and as long as you're up front about what you need, they can help you in your specific situation. Get matched with top realtors in your area today.
Get a professional home valuation
Whatever path you and your attorney decide on, your first step will likely be to get a professional home valuation, or CMA report, from an independent real estate agent or home appraiser. This gives you an idea of your house's market value, which makes it easier to calculate how much you may owe your ex-spouse if you buy them out or sell and split the proceeds.
Learn the laws in your state
What you do with the house may also depend on if you live in a community property or equitable distribution state.
- Community property state: Generally, all assets and debts accrued during your marriage are divided 50/50. This means that if you bought the house before you got married, it might be excluded — but you'll have to figure this out with your attorney.
- Equitable distribution state: If you can't agree with your ex-spouse and their legal counsel outside of court, a judge will decide on the equitable distribution of your property.
Understanding the legal process in your state is crucial, as it dictates how assets and debts are divided during a divorce.
Once you know how much your house is worth and know the laws in your state, you can decide whether it makes sense to buy out your ex-partner's equity, refinance, or sell.
How do you buy out a house in a divorce?
You have a few paths to fund the buyout and put the home in one name:
- Cash: If savings cover it, pay your co-owner directly and complete the deed transfer.
- Refinance (limited cash-out/cash-out): Replace the current mortgage with a new loan big enough to pay off the old balance and the equity owed to your ex. Fannie Mae treats many divorce buyouts as limited cash-out when the property was jointly owned for at least 12 months—lender overlays still apply.
- Assumption + release of liability (when allowed): Some loans—commonly FHA/VA/USDA—may be assumable with servicer approval, letting one spouse take over and release the other from liability. Conventional assumptions are uncommon. Always confirm with the servicer first.
- Home equity loan or HELOC: A second-lien option if your lender permits it (policies vary during/after divorce).
Important: Removing a name from title does not remove that person from the mortgage. You typically need a refinance, a qualified assumption with a release of liability, or a specific servicer process to accomplish both.
Remember that even though you won't need to pay commission fees when you're just transferring a title, you'll have to pay title transfer taxes, appraisal fees, and possibly more.
It's a good idea to devise a plan to divide these transfer costs equally so you don't end up paying more than your share.
How to buy out a house and then sell it
Buying out your ex-spouse and then selling the house on your own isn't always the best plan. Selling comes with many fees, usually around 10% of the purchase price.
Some states do allow the buying spouse to collect half of a broker's fee from the selling spouse when taking over their equity. But if you don't live in a state like that, once the house is solely in your name, you'll be responsible for all closing costs and selling fees.
If you sell together with your ex-spouse before buying them out, you'll likely be able to split these costs so you don't have to pay them all yourself.
Title and mortgage: Making the transfer official
The legal and loan steps usually follow this order:
- Settlement agreement (details the buyout amount and who keeps the home).
- Deed transfer (state-specific deed, recorded with the county, moving ownership to the staying spouse).
- Mortgage resolution: refinance into one name or request an assumption/release from the servicer if the loan allows. Until the servicer releases them, your ex is still legally liable on the loan—even if they’re off title.
Expect costs like appraisal, title/recording, lender fees, transfer taxes (where applicable), and legal fees. Build these into your buyout math.
How to buy someone out of a house when kids are involved
If you have kids, buying out a home becomes a lot trickier. While this varies greatly depending on your situation and where you live, most courts will typically allow the parent with custody of the kids to stay at the house without buying out the other spouse.
Then, as a form of child support, the former spouse can pay for some of the costs of the house. Of course, figuring out parenting time and child support is all something you'll need to discuss with your lawyer.
If you're not the one caring for the kids, your situation may be less easy to navigate.
You may need to wait months or years (often determined by a judge) before buying or selling the house, as your ex-spouse and the kids will need to find a new place to live first.
Considering tax implications
Tax implications are a critical consideration when it comes to a house buyout in a divorce. The sale of a primary residence can be subject to capital gains taxes, which can significantly impact the buyout price. Understanding these tax implications and considering strategies to minimize tax liabilities is crucial.
- Transfers incident to divorce (IRC §1041): Moving the home (or a share) between spouses as part of a divorce is generally non-taxable; the receiving spouse takes the existing cost basis. This defers tax until a later sale.
- Home-sale exclusion (IRC §121): If you sell, you may exclude up to $250,000 of gain (single) or $500,000 (married filing jointly) if you meet ownership/use tests. Timing a sale before or after divorce can affect eligibility; plan with your CPA.[1]
Because a buyout isn’t a sale, the exclusion may not apply until a later disposition. Get personalized advice before finalizing your agreement.
A financial advisor or tax professional can help you navigate the complex tax implications of a house buyout. Factors such as the length of time the property has been owned, the amount of gain, and your tax filing status can all influence the tax consequences. By seeking professional advice, you can develop a strategy to manage these tax implications effectively.
Rebuilding credit
A divorce can have a significant impact on an individual’s credit score, particularly if one spouse has been responsible for making mortgage payments. Rebuilding credit after a divorce requires a strategic approach, including making timely payments on debts and keeping credit utilization low.
Starting with a secured credit card or becoming an authorized user on a credit account can be effective ways to rebuild credit. It’s also essential to monitor your credit reports regularly and dispute any errors or inaccuracies. A financial advisor or credit counselor can provide guidance and support in rebuilding credit after a divorce. They can help you understand how to navigate the complex process of divorce and real estate, including using tools like a divorce buyout calculator and considering tax implications such as capital gains taxes.
Next steps
The process for buying out your ex-spouse will vary depending on where you live. Each state has slightly different rules when it comes to divorce, making it tricky to provide general advice.
Consulting with legal professionals can help ensure that all legal documents are properly drafted and that your interests are protected during the buyout process.
Find a great divorce attorney for the best outcome. They can help you devise a plan to achieve an equitable outcome for you and your ex-spouse.
If you decide that a sale rather than a home buyout is your best option, a knowledgeable real estate agent can help you navigate the selling process.
FAQ
What can we do with the house after a divorce?
Typically, you can buy out your ex-spouse, rent the house, or sell the house and split the proceeds. A house buyout will require you to pay your ex-spouse for their equity, while renting can provide passive income if you're on good terms with your ex. Selling is best if you want to get out quick and move on with your life. If you decide to sell, listing with one of the best low commission real estate agents can help you save on realtor fees.
Should I keep the house after a divorce?
Whether or not to keep the house is a personal decision, and it all depends on your circumstances. Many people choose to move because there are too many memories involved and they want to cut all ties with their ex. If this is what you want to do, using a house buyout calculator can help you figure out what assets you'll need to buy out your ex-spouse.
