Can I Buy My Ex-Spouse Out of the House If I Don’t Have Cash?
The short answer is yes—in many Texas divorces, you may be able to buy out your ex-spouse’s share of the home’s equity without writing a large personal check.
One of the biggest misconceptions I hear is:
“Richard, I’d love to keep the house, but I don’t have $150,000 sitting in the bank to buy out my ex.”
Fortunately, that’s not how these transactions usually work.
In many cases, the equity buyout can be accomplished through financing with the use of an Owelty Lien. The exact approach depends on your divorce agreement, your mortgage qualifications, and how the transaction is structured.
That’s why it’s so important to start planning before your divorce is finalized.
Where Does the Buyout Money Come From?
Many homeowners assume they need to use savings or retirement accounts to pay their former spouse. In reality, the funds often come from the equity already built into the home.
If you qualify for financing, those proceeds may be used to satisfy the property settlement outlined in your divorce decree.
This allows one spouse to keep the home while the other receives their agreed-upon share of the equity.
Why Texas Is Different
Texas has some of the most unique home equity laws in the country.
That’s one reason I spend so much time educating homeowners—and even attorneys—about Texas Owelty liens.
When properly created as part of a divorce property settlement, an Owelty lien may allow an eligible homeowner to finance an equity buyout without using a traditional Texas cash-out refinance and being able to borrower up to 95% of the homes appraised value. Many banks and uneducated loan offers will tell you that is not possible, but I have provided this level of financing to many times to my clients.
Depending on the loan program and your qualifications, this can create financing opportunities that simply don’t exist in many other states.
Because the legal documents and mortgage structure must work together, early planning is critical.
Richard’s Advice
I’ve spoken with many homeowners who believed they had only two choices:
- Sell the house, or
- Come up with a large amount of cash.
Often, neither assumption was correct.
Before you agree to sell your home—or drain your savings—find out what financing options are available. A short conversation before the divorce is finalized may preserve opportunities that become much more difficult later.
How Is the Buyout Amount Determined?
The buyout isn’t simply half of the home’s value.
Several factors typically come into play, including:
- The current market value of the home
- The remaining mortgage balance
- The amount of equity
- The terms of your divorce settlement
- Any agreed-upon offsets for other marital assets or debts
For example, one spouse may receive a larger share of a retirement account while the other keeps more home equity.
Every divorce settlement is different, so it’s important not to assume the math is always a simple 50/50 split.
What If I Can’t Qualify Right Now?
Don’t assume the conversation ends there. If you don’t qualify today, there may still be options worth exploring.
Sometimes we can improve your position by:
- Paying down certain debts
- Reviewing additional qualifying income by combining pay with assets.
- Improving your credit profile
- Waiting until income documentation meets lending guidelines such as child support
- Evaluating different loan programs
In some cases, a short-term plan can put you in a much stronger position just a few months later.
Should I Talk to My Attorney or My Mortgage Professional First?
The best answer is both.
Your attorney is responsible for protecting your legal interests and preparing the divorce agreement, but they are not licensed loan officers and are not proficient in how to qualify you for a mortgage.
Your mortgage professional helps determine whether the proposed settlement is actually financeable.
When those conversations happen early, everyone has a better opportunity to structure an agreement that supports your long-term financial goals.
The Biggest Mistake I See
The biggest mistake isn’t lacking cash.
It’s assuming that means you can’t keep the home.
I’ve had clients call me after signing their divorce decree only to learn that a different approach—such as a properly structured Texas Owelty lien—might have given them more flexibility.
Unfortunately, once the decree is finalized, changing course can be much more difficult.
That’s why planning ahead matters.
Frequently Asked Questions
Do I need cash to buy out my ex-spouse?
Not necessarily. Many equity buyouts are completed through financing rather than personal savings. The available options depend on your qualifications, your divorce agreement, and the loan program.
What is a Texas Owelty lien?
A Texas Owelty lien is a legal tool used to divide real property in situations such as divorce. When properly structured, it may allow an eligible homeowner to finance an equity buyout without using a traditional Texas cash-out refinance.
For a complete explanation, visit my Equity – Texas Owelty Liens page.
Can I borrow more than 80% of my home’s value?
In certain divorce situations, an Owelty lien may allow eligible borrowers to exceed the 80% loan-to-value limitation that generally applies to Texas cash-out refinances. The maximum financing available depends on the loan program and your qualifications. Many of my clients are able to access up to 95% of the homes appraised value.
Should I wait until my divorce is final?
Generally, no.
One of the best things you can do is begin discussing your mortgage options before the divorce decree is signed. Early planning often creates more opportunities and helps avoid costly surprises.
Richard’s Final Thoughts
If there’s one message I hope you take away from this article, it’s this:
Don’t assume that not having cash means you can’t keep your home.
Every week, I speak with homeowners who are surprised to learn there are financing strategies they never knew existed.
Texas Owelty liens are one of the most powerful tools available in divorce mortgage planning, yet many homeowners—and even some professionals—have never heard of them.
Before making one of the biggest financial decisions of your life, take the time to understand all of your options.
I’d be honored to help you evaluate your situation and explain what may be possible.
