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Getting a Mortgage After a Divorce

Divorce is a scary and complicated time, and maintaining a roof over your head is likely one of your primary concerns.  While obtaining a mortgage after a divorce may be a little more difficult than you may think (especially in today’s challenging economic climate), it’s not impossible.

Banks have strict underwriting requirements that must be complied with before they lend money. The lender will look at the source of your money for a down payment and your debt ratios. The lender will also look at the following to determine if you are credit-worthy:

  • Whether you have other financial obligations, such as child support or alimony.  This will probably reduce your borrowing ability.
  • Whether you receive other financial support, such as child support or alimony. This financial support can be used to qualify for the mortgage, so long as there is a six-month history and the income is set to continue for the next three years pursuant to your settlement agreement or divorce decree.
  • Whether you are on the mortgage of the marital property with your ex-spouse and you make payments on that mortgage from a joint bank account. If so, your borrowing ability may be reduced even if the divorce decree awarded your ex-spouse that property. However, if you can show that your ex-spouse has solely made the mortgage payments on that home over the past 12 months, the new lender may not take this mortgage payment on your former home into account.  Another solution is to have your ex-spouse refinance you off of the mortgage.  You could then show those refinancing papers to your new potential lender to prove that you have no further obligation on your former marital property.
  • Whether you have joint credit card debt, auto loans or student loans with your former spouse. If so, those obligations will negatively affect your ability to qualify for a mortgage unless you can prove that your ex-spouse is solely responsible for the obligation.

The good news is that most borrowers today will be able to obtain a mortgage even after a divorce, with a little help.  Your San Antonio divorce attorney can help you avoid most of these negative effects by drafting a careful and clearly worded marital settlement agreement regarding which debt belongs to which spouse to help you start anew.