Getting a divorce comes with some major life choices — and one of the most important is what to do with the family home. If you have kids (and an outstanding mortgage), that choice might be even more complicated.

Take the hypothetical example of Tom and his ex-wife, Amy, who had an amicable divorce. Rather than sell the house, they decided to keep it so their two young kids could remain in the family home. Tom moved to a nearby rental apartment.

Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how

Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP

Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast

Since Amy runs a couple of side hustles, she doesn’t have what lenders consider a fully verifiable income. So Tom agreed to keep paying the mortgage — under his name — and Amy would pay him back as soon as she got paid with her side-hustle earnings.

They’ve never had any issues with this arrangement. But now Tom is thinking about buying a condo, and he’s worried he’ll have trouble getting a second mortgage — even though Amy reimburses him for the mortgage payments on the family home.

These types of situations are becoming more common, especially among divorced or separated parents trying to prioritize stability for their kids. But lenders don’t assess mortgages based on family dynamics.

And misunderstanding how this works could lead to loan denials, lower borrowing limits or higher rates.

If you have a joint mortgage, you’re both responsible for it — even after divorce. Some couples choose to sell the house and split the proceeds, refinance the mortgage in one spouse’s name or have one spouse buy out the other.

Keep in mind, a mortgage isn’t the same as a deed (a document that proves you hold title to a property). So, you can hold title without being on the mortgage (and vice versa).

Some divorcing couples choose to keep the mortgage as is. In Tom’s case, he’s responsible for the loan from a legal standpoint, which could impact his ability to get a second mortgage.

According to The Mortgage Reports, a borrower’s debt-to-income ratio (DTI) plays a critical role when qualifying for a new mortgage. If a person is listed on another mortgage, that obligation is included in their DTI calculation and can impact their ability to qualify — even if they are not the one making the payments on the existing loan (1).

Your DTI is calculated by tallying up all of your debts, including your mortgage, car loan and credit cards, and then dividing it by your gross income.

The higher your DTI ratio, the harder it could be to qualify for a mortgage. Lenders typically want to see a DTI of 36% or less, though some may allow for a DTI in the 45% range. In Tom’s case, his DTI looks higher than it is, since his name is on a mortgage that his ex-wife is reimbursing him for.

Keep in mind that if you pay child support — as Tom does — that will also count against your DTI in the same way as a car loan or credit card debt.

According to Mortgage One, this reduces the amount you may qualify to borrow. If you apply for a mortgage jointly with a new spouse or partner, your support obligations could also affect their qualification, depending on how the application is structured (2).

Read More: The average net worth of Americans is a surprising $620,654. But it almost means nothing. Here’s the number that counts (and how to make it skyrocket)

When applying for a second mortgage, having a divorce decree that states your ex is responsible for the first mortgage can help your case — along with proof of payment, such as bank statements showing that your ex has paid you back each month.

But it’s still no guarantee, and lenders may still view you as legally liable. You’ll be evaluated by lenders based on one income instead of two, which could lower your borrowing power. You could also be charged a higher mortgage rate.

Getting around this could mean refinancing your first mortgage or removing yourself from it altogether. If you refinance and your ex takes over the mortgage, there will still be a cost to refinancing (typically 3-6% of the loan’s remaining balance) (3).

And your ex may not get approved for the refinance if they have a low credit score or a high amount of debt (or, as in Amy’s case, an irregular income).

However, if Amy can document a consistent income over a 12-month period (which can include alimony and/or child support) and maintain a good credit score, she could eventually get a mortgage under her own name — which is better for her and better for her ex. Their divorce decree should clearly outline their financial arrangement to demonstrate documentable income.

Amy could see if she’s eligible for an FHA loan, which is backed by the Federal Housing Administration, which has more flexible credit requirements and lower DTI requirements. Or, she could see if she could find a new co-signer (perhaps her parents) and then together purchase the house from Tom.

Keeping the family home can provide stability and continuity to kids during a divorce. It could also be a strategic financial decision. But, eventually, refinancing might be a better path to financial freedom — for both partners.

The average tax refund could hit $3,500 in 2026. Here’s how to turn that juicy check into a long-term retirement win

Robert Kiyosaki says this 1 asset will surge 400% in a year — and he begs investors not to miss its ‘explosion’

Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

Warren Buffett used these 8 repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)

Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

The Mortgage Reports (1); Mortgage One (2); Rocket Mortgage (3)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.