Keeping the Home After a Separation: How a Spousal Buyout Mortgage Works in Ontario

If one partner wants to keep the family home after a separation, a spousal buyout mortgage can make it possible — even if your equity is tied up. Here’s how it works and what you need to qualify.

1. What Is a Spousal Buyout Mortgage?

A spousal buyout allows one person to refinance the mortgage up to 95% of the home’s value to buy out the other partner’s share.This option is only available under specific insurer programs (like CMHC, Sagen, or Canada Guaranty).

2. Key Eligibility Requirements

To qualify, you’ll need:

• A legally binding separation agreement outlining asset division

• Proof of the buyout amount owed to the other party

• A current appraisal of the home

• The ability to qualify for the new mortgage on your income alone

Note: The buyout funds must go directly to the other spouse — not for debt consolidation or personal use.

3. How the Math Works

Let’s say:

• Home value: $800,000

• Current mortgage: $500,000

• Buyout amount: $150,000

You can refinance up to $760,000 (95% of $800,000).$500,000 pays off the existing mortgage, and $150,000 goes to your ex-partner. The remainder covers legal fees and costs.

4. What Lenders Look At

Lenders assess your:

• Income stability and employment

• Credit history

• Debt ratios

• Updated appraisal

A broker can match you to a lender that supports spousal buyouts — not all banks do.

5. Why Timing Matters

Don’t wait until the agreement is finalized to start the conversation. Knowing your numbers early helps ensure your settlement terms are realistic and that you can qualify to keep the home.

Bottom Line:A spousal buyout is often the cleanest way to divide property — and keep stability for kids and family. The key is getting professional mortgage advice before signing the separation papers.