Why Getting a Mortgage During Divorce is Tougher Than You Think—and How to Navigate It

Divorce brings plenty of challenges on its own, but when you add mortgage hurdles into the mix, the situation can quickly become overwhelming. One of the biggest questions I hear from my clients as a Certified Divorce Real Estate Expert (CDRE) is, “Can I actually get a mortgage on my own?” It’s a big question—and the answer is, “It depends.” Mortgage approval during or after a divorce isn’t impossible, but it requires some solid financial planning and a clear understanding of what lenders will be looking for.

Here’s a rundown of the main obstacles you may face and some practical steps to help you or your clients better position themselves to secure that all-important mortgage.

1. Income Requirements: Showing Stability in Uncertain Times

One of the first things lenders want to know is that you have a steady, reliable income source. This can be tricky during or right after a divorce, especially if one spouse was primarily dependent on the other’s income or if your own income fluctuates.

In many divorce cases, one spouse may need to rely on alimony or child support payments to supplement their income. While these payments can be counted as income in many cases, they often need to be received consistently for a certain amount of time—typically six months to a year—before a lender will consider them as a viable source of income. Even then, lenders may want to see that payments are likely to continue for at least three more years.

How to Navigate It:

• Start documenting early. If you’re relying on alimony or child support, start tracking payments right away, and make sure they’re consistent.
• Work with your divorce attorney to establish a clear payment history. The sooner you can establish this, the easier it will be to meet the lender’s requirements.
• Consider alternative loan options. Some lenders may have more flexible underwriting guidelines, so explore a few different loan programs to see what works best.

2. Credit Challenges: Managing Joint Debt and Building Individual Credit

Credit is often a major hurdle for divorcing couples, especially when debts are shared. If you and your ex-spouse shared credit cards, loans, or other debts, any missed or late payments can impact both of your credit scores, making it harder to qualify for a mortgage. Even if you weren’t the one making the payments, your credit can still suffer if the accounts were joint.

On the flip side, if you were financially dependent on your ex-spouse, you might not have enough individual credit history to meet a lender’s requirements. It’s common to feel like you’re starting from scratch.

How to Navigate It:

• Separate joint accounts ASAP. Working with your attorney or mediator to close joint accounts and transfer balances to individual accounts is crucial. This helps reduce the risk of missed payments affecting both parties.
• Focus on building your own credit history. Start by opening a low-limit credit card in your name, paying it off monthly, and building a history of responsible credit use.
• Check your credit report. It’s worth checking your credit report for errors, especially if there were disputes over joint debts. If there’s anything inaccurate, dispute it to clean up your score.

3. Debt-to-Income Ratio: Recalculating Your Financial Standing

After a divorce, your debt-to-income ratio (DTI) may not look the same as it once did. If you’ve taken on half of the marital debt—or more—you might find that your DTI has taken a hit. This can be problematic when qualifying for a mortgage, as lenders typically prefer a DTI of 43% or lower.

How to Navigate It:

• Create a post-divorce budget. Calculate your income, monthly expenses, and any outstanding debts to get a clear picture of where you stand financially. The better you understand your new financial situation, the easier it will be to make adjustments that positively impact your DTI.
• Look at paying down high-interest debt first. Paying off credit cards or other high-interest debts can reduce your monthly obligations and improve your DTI, which can make you a more appealing candidate to lenders.
• Consider consolidating debt. If you have multiple small debts, a consolidation loan could lower your monthly payments and improve your DTI ratio, but be sure to consult with a financial advisor to ensure it’s the right move for you.

4. Down Payment Challenges: Accessing Liquid Funds

Divorce often involves dividing assets, and while you might be getting a fair share of marital property, you may find that much of your net worth is tied up in non-liquid assets like retirement accounts or investments. When it’s time to secure a down payment, accessing those funds can be tricky or come with tax penalties.

How to Navigate It:

• Negotiate assets with liquidity in mind. If possible, work with your divorce attorney and financial advisor to prioritize cash assets or accounts with fewer withdrawal restrictions. You may need cash on hand to secure a loan or cover closing costs.
• Consider a gift from family. In many cases, lenders allow family members to gift funds for a down payment, but these gifts need to be well-documented to meet lender requirements.
• Explore down payment assistance programs. Some programs are designed to help borrowers with limited funds, so ask your lender about available options.

5. Timing: The Best Time to Apply for a Mortgage During Divorce

Timing is often one of the trickiest aspects of getting a mortgage during divorce. Ideally, it’s best to wait until the divorce is finalized so that lenders have a clear view of your financial situation without any pending court settlements. However, waiting isn’t always an option, especially if there’s a need to buy out a spouse or move on quickly.

How to Navigate It:

• Get pre-approved early. Even if your financial situation might shift, an early pre-approval can give you a better sense of what loan options you may qualify for. Just be aware that this is a preliminary step and could change.
• Work with a lender experienced in divorce cases. Many mortgage professionals understand the unique challenges that divorcing clients face, and they may be able to offer alternative options or flexible timelines.
• Be prepared to provide extra documentation. During divorce, lenders often require more documentation than they would otherwise. Work closely with your CDRE and your financial team to stay organized and prepared.

Final Thoughts

Securing a mortgage during or after a divorce requires careful planning and a little extra patience. But with the right preparation, it’s absolutely possible. If you’re facing these challenges, remember that you don’t have to go it alone—your divorce real estate expert, lender, and legal advisors can guide you through the process step-by-step, helping you take back control over your financial future.

Facing these mortgage obstacles isn’t easy, but with support, preparation, and a bit of strategy, you can move forward with confidence and make the best choice for your next chapter.