The short answer is yes—and in many Texas divorces, it’s one of the smartest financial decisions you can make.

If you and your spouse own a home together, getting divorced doesn’t necessarily mean the house has to be sold. Many homeowners are surprised to learn they may be able to refinance the home, remove their ex-spouse from ownership, and use the home’s equity to complete a buyout.

However, how the divorce is structured makes all the difference.

As a Certified Divorce Lending Specialist (CDLS), I’ve helped Texas homeowners navigate these situations for years, and I’ve seen firsthand how the right mortgage strategy can save families thousands of dollars while helping one spouse keep the home they love.

Why Most People Think They Have to Sell

One of the biggest myths surrounding divorce is that the home must be sold so each spouse can receive their share of the equity.

While selling is certainly one option, it’s often not the best one.

Selling a home means paying:

Real estate commissions
Closing costs
Moving expenses
Potential capital gains taxes
Costs associated with buying another home at today’s interest rates

In many cases, keeping the home can make much better financial sense—especially if you’ve built significant equity or have a low interest rate on your current mortgage.

The Texas Owelty Lien: One of the Best-Kept Secrets in Mortgage Lending

Texas has a unique legal tool called an Owelty lien that allows one spouse to buy out the other’s equity as part of a divorce settlement.

Many attorneys know about it.

Very few mortgage professionals truly understand how to structure it correctly.

When done properly, an Owelty lien often allows you to:

Access equity to pay your former spouse.
Avoid Texas cash-out refinance restrictions in many cases.
Potentially finance up to 95% of the home’s value with eligible conventional financing, depending on current lending guidelines and borrower qualifications.
Preserve more of your home’s equity.

This is one reason it’s so important to involve a mortgage professional before the divorce is finalized—not after.

Timing Matters More Than Most People Realize

One of the biggest mistakes I see is waiting until after the divorce decree is signed before speaking with a lender. You definitely want to make sure the decree is structured correctly to ensure the retaining spouse can successfully complete the required refinancing needed to pay out the equity. And remember, unless you are doing a qualified assumption of an existing mortgage (FHA and VA), that existing mortgage just be refinanced if the spouse leaving is on the current mortgage – regardless of the current rate.

Unfortunately, by then some financing options may no longer be available.

I’ve had clients come to me after their divorce was finalized only to discover that a simple change in the wording of the decree could have saved them tens of thousands of dollars.

Planning ahead gives your attorney and mortgage professional the opportunity to work together so the settlement is structured in the most financially beneficial way possible.

What If My Name Isn’t Currently on the Mortgage?

This is another question I receive regularly.

In many divorces:

One spouse is on title.
The other spouse is on the mortgage.
Sometimes one spouse is on neither but has been awarded the home in the divorce.

Every situation is different.

Depending on the circumstances, there may still be financing solutions available.

The key is evaluating your situation before assuming you don’t qualify.

Can I Afford to Keep the House?

Keeping the home isn’t just about qualifying for a mortgage.

It’s about making sure the payment fits comfortably within your long-term financial goals.

We’ll evaluate:

Your employment income
Child support (when applicable)
Spousal maintenance
Retirement income
Assets
Credit profile
Overall monthly budget

Sometimes keeping the home makes perfect sense.

Other times, selling may be the better financial decision.

My goal isn’t to sell you a mortgage—it’s to help you make the smartest financial decision for your future.

A Real-Life Example

Recently, I spoke with a homeowner whose divorce decree required the home to be sold.

After reviewing the situation, we discovered that if the mortgage strategy had been discussed before the decree was finalized, there may have been additional options available to help one spouse keep the home.

Unfortunately, once the decree is finalized, changing those terms can become much more difficult. In most cases, the courts will not amend an existing finalized divorce decree.

That’s why I encourage anyone going through a divorce to speak with both their attorney and a mortgage professional as early as possible.

Why Experience Matters

Divorce mortgage lending is one of the most specialized areas of residential financing.

Many loan officers may only encounter a handful of these transactions over the course of their careers.

I’ve spent years helping clients navigate:

Owelty liens
Equity buyouts
Divorce refinances
Removing an ex-spouse from the mortgage
Reverse mortgages after divorce
Complex income qualification
Asset depletion strategies
Texas-specific lending guidelines

Having someone who understands both the mortgage process and the unique challenges of divorce can make a significant difference. In addition to that, I have access to more lender programs than any other lender in the country, if your desire is to keep your home, I have more options that anyone at rates better than anyone.

Frequently Asked Questions

Can I refinance my house during a divorce?

Yes. Depending on the timing and the terms of your divorce, refinancing may be possible before or after the divorce is finalized. However, if you refinance before the divorce is finalized, in community property states like Texas, the current spouse still retains ownership.

Can I remove my ex-spouse from the mortgage?

Yes, if you qualify for a refinance into a new mortgage or a qualified mortgage assumption of the existing one.

What is an Owelty lien?

An Owelty lien is a Texas legal mechanism used during divorce to divide home equity between spouses. When structured correctly, it can provide financing advantages compared with a traditional Texas cash-out refinance. Those advantages are lower rates and no Texas 50(A)6 restrictions like limiting the loan amount to 80% of appraised value and one equity loan on title at a time.