Spousal Buyout Mortgage in Canada: Keeping the House After a Separation
By Jordan Ellis · Published · Reviewed
Quick Answer
Canada's spousal buyout program lets one partner borrow up to 95% of a home's appraised value to pay out the other's equity after a separation, far above the 80% cap on ordinary refinances. It runs through lenders using mortgage default insurance and is treated like a purchase, so the usual minimum down payment tiers apply: 5% on the first $500,000 and 10% on the rest. On a $700,000 home with a $400,000 mortgage, the staying partner can borrow up to about $655,000: pay off the $400,000, hand the ex their $150,000 share of the equity, and keep the house. You need a signed separation agreement, an appraisal, sole qualification under the stress test, and both parties currently on title and the mortgage.
The house is usually the biggest asset in a separation — and the hardest to divide, because you can’t cut a bungalow in half. The spousal buyout program exists precisely so one partner can keep it.
The math on a real file
Home appraised at $700,000, joint mortgage of $400,000, equity $300,000, split 50/50 per the separation agreement:
| Step | Amount |
|---|---|
| Maximum new mortgage (5% of first $500k + 10% of the rest kept as equity) | $655,000 |
| Pays off joint mortgage | −$400,000 |
| Ex’s equity payout | −$150,000 |
| Room left for legal and appraisal costs, or not borrowed at all | $105,000 |
The staying partner doesn’t have to borrow the maximum: a mortgage of about $555,000 plus costs covers the payout, and the default-insurance premium gets added on top. The departing partner walks with $150,000 and a clean break. Run the new payment with the refinance calculator.
The requirements that make or break the file
- Signed separation agreement. Lenders don’t price “we’ve agreed verbally” — the buyout amount and support terms must be documented and signed.
- Both on title and mortgage. The program is for untangling a joint obligation, not buying out a partner who was never on the loan.
- Appraisal. The 95% is against appraised value, not your Zestimate.
- Sole qualification under the stress test. This is where most files die: one income carrying what two incomes bought. Child/spousal support received counts as income (documented); support paid counts as debt. Check your number with the mortgage stress test calculator before falling in love with the outcome.
- Insured file. The 95% LTV requires mortgage default insurance — see what that premium costs.
If the numbers don’t work
- Co-signer — parents or a new partner can bridge qualification, but hand them the co-signing reality first
- Offset with other assets — take less house equity in exchange for their pension share or investments; RRSP-to-RRSP transfers on separation move tax-free on form T2220
- Sell, honestly. Two smaller housing situations funded by real equity beat one unaffordable house and a decade of resentment. The rent vs buy math applies to the next chapter too.
The order of operations
Separation agreement first (lawyer), appraisal second, lender third — a broker who places insured files regularly, since not every lender touches spousal buyouts. And once it’s done, update everything: title, will, beneficiaries, and the net worth snapshot of your new single household.
Official sources
Rules and dollar limits change. Confirm current amounts with the official pages below before you act · Last reviewed .
- Principal residence and other real estate (Canada Revenue Agency)
- Minimum qualifying rate for uninsured mortgages (OSFI)
- Guideline B-20 explained (OSFI)