Divorce & Separation Mortgage Alberta — Spousal Buyout, Refinancing & Your Options

Written by Shawn Selanders | RECA-Licensed Mortgage Broker | 25+ Years Experience | Updated February 2026

When a marriage or common-law relationship ends, the house is usually the biggest financial decision. Who keeps it? How do you buy out your spouse? Can you afford the mortgage on one income? What if you don't have 20% equity?

These are the questions I help people answer every week. There are programs in Canada specifically designed for this situation — including one that lets you refinance up to 95% of your home's value to buy out your spouse. Most people don't know it exists.

This guide walks you through every option — clearly, honestly, and without judgment. I've helped hundreds of people through this process over 25 years, and the mortgage side doesn't have to be the hard part.

Shawn Selanders, Alberta Mortgage Broker

Discreet, Experienced, Free

I understand this is a difficult time. When you call me, I'll give you a straight answer about what's possible — what you qualify for on your own, how a buyout works, and what your real options are. No pressure, no sales pitch.

I've been through this process with clients hundreds of times. I know how the lenders work, what the insurers require, and how to structure a file that gets approved — even when you're going from two incomes to one.

My service is free to you. The lender pays my fee.

1. Your 3 Options for the House

When a relationship ends, there are really only three things you can do with the family home:

Option A: Sell the Home

Pay off the mortgage, split the remaining equity according to your separation agreement. Simplest option. Both walk away clean. No mortgage qualification needed. You'll each need to figure out housing separately.

Option B: One Spouse Buys Out the Other

The spouse keeping the home refinances the mortgage in their name only, pays the departing spouse their share of the equity, and becomes sole owner. This is the spousal buyout.

Option C: Both Keep the Mortgage (Temporary)

Neither can afford to buy out the other or sell right now. Both names stay on the mortgage. Risky — you're both liable, and it complicates future borrowing for both of you. Usually a last resort.

My advice: If one of you wants to keep the home and can qualify, Option B (the spousal buyout) is usually the best path. It provides stability — especially when children are involved — and Canada has a specific program designed to make it work. Let me explain.

2. The Spousal Buyout Program (95% LTV)

Normally, when you refinance a mortgage, the maximum you can borrow is 80% of the home's value. But Canada has a special exception for separation and divorce:

The Spousal Buyout Program:

Through CMHC, Sagen, or Canada Guaranty insurance, one spouse can refinance up to 95% of the home's appraised value to buy out the other spouse's equity.

This is treated as a purchase (not a standard refinance) — which is why the 95% LTV is available.

The result: the departing spouse gets their equity in cash, the remaining spouse gets a new mortgage in their name only, and both parties can move forward financially.

Requirements for the Spousal Buyout Program:

  • ✅ A legally binding separation agreement (drafted by lawyers — not a mediator template)
  • ✅ Both spouses currently on title
  • ✅ The home must be the primary residence
  • ✅ The remaining spouse must qualify for the new mortgage on their own income
  • ✅ A full appraisal to determine current market value
  • ✅ Funds can be used to pay the spouse's equity share AND consolidate joint debts as outlined in the separation agreement

3. The Buyout Math — A Real Example

The Situation:

Home appraised value: $550,000

Current mortgage balance: $380,000

Total equity: $170,000

Each spouse's share (50/50): $85,000

The Buyout:

Remaining spouse needs to pay departing spouse: $85,000

Plus pay off existing mortgage: $380,000

Plus legal and closing costs: ~$5,000

Plus CMHC insurance premium (at 95% LTV): ~$17,600

New mortgage total: approximately $487,600

Can This Work at 95% LTV?

95% of $550,000 = $522,500 maximum mortgage

New mortgage needed: $487,600

Yes — this works. The remaining spouse needs only about 5% equity in the home, or $27,500. Without the spousal buyout program, they'd need 20% equity ($110,000) — which most separating couples don't have in liquid cash.

4. Qualifying on One Income

This is the hardest part for most people. You qualified for the mortgage together. Now you need to qualify alone — at potentially a higher mortgage amount (because you're buying out equity). The stress test still applies: you must qualify at the higher of 5.25% or your contract rate plus 2%.

What Helps You Qualify:

  • Child support received: Counted as income by most lenders (must be in the separation agreement and you usually need proof of receipt for at least a few months)
  • Spousal support received: Also counted as income — a significant boost to qualification
  • Consolidating joint debts: If the buyout includes paying off joint credit cards, car loans, etc., those debts are removed from your ratios — improving your TDS
  • Longer amortization: A 30-year amortization (available with 20%+ equity) reduces your monthly payment, improving your debt ratios
  • A co-signer: A parent or family member can co-sign to strengthen the application if needed

What Hurts Your Qualification:

  • Child/spousal support payments (if you're paying): These are treated as a monthly liability — like a car payment. They reduce how much you can borrow. Some lenders deduct support from gross income instead of adding it to liabilities, which is more favourable — I know which ones.
  • Joint debts still in both names: Even if the separation agreement assigns a debt to your ex, lenders still count it as your liability until your name is actually removed from the account.
  • Damaged credit: Missed payments during the separation period can hurt. If joint accounts went delinquent, both credit scores suffer.

5. How Support Payments Affect Your Mortgage

Support payments are one of the most misunderstood parts of divorce mortgage qualification. Whether they help or hurt depends entirely on whether you're receiving or paying:

Receiving Support

Child support and spousal support received count as income.

Lenders typically want to see it documented in the separation agreement AND evidence that it's being received consistently.

This can make a massive difference in qualification — $2,000/month in support is equivalent to roughly $24,000/year in additional qualifying income.

Paying Support

Support payments are treated as a monthly debt obligation — similar to a car payment or credit card minimum.

This reduces your borrowing capacity.

Broker tip: Some lenders deduct support from your gross income rather than adding it to your liabilities. The math works out more favourably. I know which lenders use which method.

Even if support is set to $0, lenders need written confirmation of that in the separation agreement before they'll approve your mortgage. Don't skip this step — it can hold up your entire file.

6. The Separation Agreement — Why It's Non-Negotiable

No lender will approve a spousal buyout without a legally binding separation agreement. This is the foundation of the entire process.

What the Separation Agreement Must Include:

  • Division of the matrimonial home (who keeps it, what equity is owed)
  • Child support amount and terms (even if $0 — it must be stated)
  • Spousal support amount and terms (even if $0)
  • Division of joint debts (who is responsible for what)
  • Division of other assets (vehicles, investments, pensions, etc.)
  • Signatures of both parties and their respective lawyers

Critical warning: Some lenders will not accept separation agreements drafted by mediators or downloaded from the internet — even if signed by both parties. To be safe, each spouse should have their own lawyer draft or review the agreement. This protects both of you and ensures lender acceptance.

You do not need to wait until the divorce is finalized. A separation agreement is sufficient to proceed with a spousal buyout — the formal divorce can follow later.

7. The Spousal Buyout Process — Step by Step

Step 1: Call Me for a Confidential Assessment

Before you finalize your separation agreement, call me. I can tell you what you qualify for on your own, how much mortgage you can carry, and whether a buyout is financially feasible. This information can actually help shape the terms of your agreement.

Step 2: Finalize Your Separation Agreement

Work with your lawyers to complete the separation agreement. Make sure it clearly outlines the home division, support payments, and debt allocation. I can tell you exactly what the lender needs to see in this document.

Step 3: Appraisal

A licensed appraiser determines the current fair market value of the home. This sets the equity calculation and the maximum buyout amount. Cost: approximately $300–$500.

Step 4: Mortgage Application

I submit your application to the best lender for your situation. The spousal buyout is processed as a purchase (not a refinance), which is why 95% LTV is available through the insured program.

Step 5: Approval and Closing

Once approved, your lawyer handles the title transfer and mortgage registration. The departing spouse receives their equity payment, is removed from title and from the mortgage, and you become sole owner with a new mortgage in your name.

Timeline: From initial call to closing, the process typically takes 30–60 days, depending on how quickly the separation agreement and appraisal are completed.

8. What If You Can't Qualify?

Sometimes the numbers don't work with an A-lender. Your income is too low, your credit was damaged during the separation, or the debts are too high. That doesn't mean you're out of options.

B-lender financing: Higher rates (typically 1–2% above A-lender rates) but more flexible income and credit requirements. A good bridge solution — you can refinance to an A-lender once your credit recovers and income stabilizes.

Private lending: Short-term solution (6–24 months) when banks and B-lenders won't approve. Higher rates (8–14%) but can prevent a forced sale when you need time to get your finances in order. Best used with a clear exit strategy.

Co-signer: A parent or family member can co-sign to strengthen your application. They don't need to live in the home — they're providing income support for qualification purposes.

RRSP Home Buyers' Plan: If you haven't owned a home in 4+ years (or if you're buying out as a "first-time buyer" under the HBP definition after separation), you may be able to withdraw up to $60,000 tax-free from your RRSPs to help fund the buyout. Ask your accountant about eligibility.

Sell the home: If keeping the home isn't financially feasible, selling is always an option. I can help you understand what the numbers look like either way so you can make an informed decision — not an emotional one.

9. Frequently Asked Questions

Q: Do I need to wait until the divorce is final?

A: No. You can proceed with a spousal buyout as soon as you have a legally binding separation agreement. The formal divorce can come later. Most lenders don't require a finalized divorce — just the separation agreement.

Q: Can I include joint debts in the buyout?

A: Yes. One of the major advantages of the spousal buyout program is that you can roll joint debts into the new mortgage — credit cards, car loans, lines of credit. This simplifies both parties' finances and can significantly improve your debt ratios by eliminating those monthly payments. The debts must be outlined in the separation agreement. Debt consolidation guide →

Q: What about common-law separations?

A: The spousal buyout program applies to both married and common-law couples. Common-law property division rules differ by province (Alberta's are different from Ontario's), but from a mortgage perspective, the buyout process is the same. You still need a separation agreement or court order outlining the division.

Q: Will I have to pay a penalty to break my current mortgage?

A: Possibly. If your current mortgage term isn't up, there may be a prepayment penalty. However, many lenders will blend the penalty into the new mortgage or waive it if you're staying with the same lender. If timing works, waiting until renewal to complete the buyout means zero penalty. I'll calculate this for you. Renewal guide →

Q: Can my spouse force me to sell?

A: If you can't agree, either party can apply to the court for an order to sell. This is why reaching an agreement — ideally with the help of lawyers and a mortgage assessment from me — is so important. Knowing what's financially feasible helps both parties negotiate realistically.

Q: I'm self-employed and going through a separation. Can I still do a buyout?

A: Yes — but self-employed qualification adds complexity. I specialize in self-employed mortgage files. Self-employed guide →

Q: How much does it cost to use a broker for this?

A: $0. My service is free. The lender pays my fee. Whether it's a spousal buyout, a new purchase after separation, or a refinance — no cost to you.

10. Talk to Shawn — Confidential, Free

I know this isn't easy. But the mortgage side doesn't have to add to your stress. Call me for a confidential conversation — I'll tell you what you qualify for, walk you through the buyout math, and help you make an informed decision. No judgment. No pressure.

Separation & Divorce Mortgage Help — Confidential

25+ years helping Albertans navigate the mortgage side of separation. Discreet, compassionate, free.

Call/Text: 403-703-6847

Email: ShawnSelanders@gmail.com

Office: 614 High View Park NW, High River, AB T1V 1E5

Hours: Monday to Friday: 9:00 – 7:00  |  Saturday & Sunday: 12:00 – 5:00

Serving clients across Alberta:

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Shawn Selanders — RECA-licensed mortgage broker

Your Local Mortgage Professionals — Independent Mortgage Professional

Serving Calgary, Okotoks, High River, Diamond Valley, Foothills County, and all of Alberta since 1999

This page is for informational purposes only and does not constitute financial or legal advice. Mortgage approval is subject to lender criteria and conditions. The spousal buyout program requires a legally binding separation agreement and qualification by the remaining borrower. Consult a family lawyer for legal advice regarding separation and divorce. Consult an accountant for tax implications. O.A.C. E.&O.E.