The buyout math: what it really costs to keep the house

A buyout sounds like one number. It's three: what your spouse is owed, what the new loan will cost each month, and whether a lender will give you that loan on one paycheck. I'll take them in that order with one example house, and every assumption is printed next to the number it produces.

The formula on one line

Buyout owed = (agreed value minus loan payoff minus anything you both agree to subtract) divided by 2, then adjusted for reimbursements and trade-offs.

Every piece of that has a catch.

Start with the value. In a contested case, Family Code 2552 has the court value assets as near as practicable to the time of trial. If you're settling, you pick the number yourselves, usually from an appraisal. Put a date on it, because a value from last spring is only a guess about this fall.

The loan number should come from a written payoff statement, which you request from the servicer. The CFPB's explainer on payoff amounts says the payoff is different from your current balance: it adds interest due through the payoff day and can add unpaid fees.

Then there's what you subtract. Some couples knock off an estimate of what selling would have cost, on the theory that the spouse leaving shouldn't get more than they'd have netted from a sale. Others say nobody is selling, so nothing comes off. I couldn't find anything in the statutes that settles it either way, so treat it as a negotiating point and ask your attorney or mediator before you agree.

Last come the adjustments. A down payment from before the marriage can come back off the top under Family Code 2640, without interest. Couples also trade the house against other things, a retirement account or a paid-off car, which is how a lot of buyouts get covered without any new cash.

A worked example

The house below is invented. The rates are real. In 2021 the couple refinanced into a $345,000, 30-year loan at 2.96 percent, which was the average 30-year rate for that year in Freddie Mac's survey. That payment is $1,447 a month for principal and interest. About five years of payments later, the payoff is $306,500, and they agree the house is worth $540,000. The right-hand column assumes they agree to subtract 6 percent as pretend selling costs. That 6 percent is an assumption for the example, not a statement of what selling costs.

Two things jump out. The 6 percent question is worth $16,200 to the person leaving, so it deserves a real conversation and not a shrug. And the payment roughly doubles. Refinance costs aren't even in there.

People blame the buyout for that jump, and only part of it is the buyout. Refinancing just the existing $306,500 payoff at 7.24 percent, with no buyout at all, takes the payment from $1,447 to about $2,089. The rest is the $116,750.

The old rate versus the new one

The low was the week of January 7, 2021, at 2.65 percent. If you bought or refinanced while the line sat under 3.2 percent, from mid-2020 through the end of 2021, your rate probably starts with a 2 or a 3. The latest reading is 7.24 percent for the week of October 29, 2026, and the October average of 7.33 percent was the highest monthly figure since late 2023.

A divorce doesn't wait for rates. Still, look at how fast this moved. Our example's $423,250 loan would run about $2,551 a month at February 2026's average of 6.05 percent and about $2,910 at October's 7.33 percent. That's roughly $360 a month, from one season to the next. Rates move both ways, and nobody I know can call them, me included.

Before you assume a refinance is the only way, ask the servicer, in writing, whether it will release your spouse from the existing loan without one. If the answer is no, you've lost a stamp.

How equity moved in the Sacramento metro

Rates are half of it. The other half is what the house is worth. The Federal Housing Finance Agency's all-transactions index for the Sacramento-Roseville-Folsom metro follows repeat sales of the same houses over time. Since 2019 it has done two very different things.

From the first quarter of 2019 to the second quarter of 2022, the index rose 46.5 percent. Then it slipped 7.8 percent by early 2023, climbed back, and in the second quarter of 2026 it sat at 408.95, within a hair of where it was four years earlier.

What that means for a buyout depends on when you bought. As pure index arithmetic, a house bought for $400,000 in early 2019 that tracked the metro index would be about $586,000 now. A house bought for $540,000 in spring 2022 would be about $540,300. Same street, same divorce paperwork, very different equity. Your house isn't the index, so get an appraisal. The index just tells you if the fight is over a lot of money or hardly any.

Qualifying on one income

The CFPB defines debt-to-income as all your monthly debt payments divided by your gross monthly income, and it notes that different loan products and lenders set different limits. Back to the example, left column: the $2,884 payment, plus an assumed $600 a month for property tax and insurance, plus an assumed $450 for a car payment and a credit card. That's $3,934 a month in debts.

Why those two lines? A June 2026 study from the Federal Reserve Bank of St. Louis looked at more than 30 million home purchase applications from 2018 to 2024. Denial rates sat between 8 and 10 percent all the way from a 20 percent ratio to 50 percent, with no visible jump at the old 43 percent line. At 50 percent, denials jumped 15 to 17 percentage points. Their takeaway for borrowers was that lenders treat 45 percent much like 35 percent. The line that matters is 50, and you want some room under it.

If you'll be receiving spousal or child support, a lender may count it as income, with conditions. Freddie Mac's Single-Family Seller/Servicer Guide, in section 5305.2, requires a legally binding document such as a signed court order, an expectation that the payments continue at least three years, and documentation of the obligation for the previous six months. Support that ends in two years, or a temporary order with no history behind it, may not help you qualify. Ask the lender how they'll treat yours before you sign a settlement that depends on it.

When the numbers don't work

Sometimes the honest answer is that nobody can keep the house, and the spreadsheet says so before anybody is ready to hear it.

If you end up comparing a buyout against selling, it helps to see more than one kind of number side by side: an appraisal, what a listing might bring, and a cash offer. One local buyer, 916 Home Offer, explains how a fair cash offer gets figured, and their site lets you ask for a cash number on the house. Getting a quote isn't selling. Actually selling while the case is open takes both signatures or a court order.

Here's my one piece of advice, from a woman who did it in the wrong order: take the payoff statement, the appraisal and your last few pay stubs to a loan officer before the mediation, and walk in already knowing the number.