Deciding what happens to the marital home is often one of the most difficult aspects of divorce. Even when both spouses agree that one person will remain in the home, refinancing the mortgage can be a major obstacle—especially in a higher interest rate environment.
Beginning October 1, 2025, a new Maryland law introduces a significant shift. Under certain circumstances, divorcing homeowners may be able to keep their existing mortgage without refinancing—maintaining the same loan terms, interest rate, and monthly payment while removing the other spouse from financial responsibility.
The Traditional Challenge
Historically, the primary way to remove a spouse from a mortgage was to refinance the loan into one party’s name. For many homeowners, this has presented several difficulties:
- Higher interest rates compared to the original loan
- Additional costs, such as closing fees and appraisals
- The challenge of qualifying for a new mortgage on a single income
When refinancing was not feasible, couples were often left with less desirable options—selling the home or keeping both spouses tied to the mortgage.
A New Option: Mortgage Assumption
Maryland’s new law (House Bill 1018) requires certain lenders to permit mortgage assumption in divorce situations. This allows one spouse to take over the existing loan without refinancing.
Key benefits include:
- Retaining the original interest rate and monthly payment
- Avoiding refinancing-related expenses
- Removing the other spouse from ongoing liability
The law applies to many conventional mortgage loans and may also extend to loans originated before October 1, 2025, provided the divorce is finalized on or after that date.
Important Limitations
While the law creates new opportunities, it does not apply universally:
- Government-backed loans (such as FHA, VA, or USDA) are not automatically covered
- Mortgages held by some large national lenders may fall outside the statute
However, even in these cases, assumption may still be possible depending on the lender’s policies.
Additionally, the spouse seeking to assume the mortgage must still meet the lender’s qualification requirements, including income and credit criteria.
Strategic Considerations
Although the law simplifies the process in many cases, careful planning remains essential. Structuring a divorce settlement or court order in a way that supports mortgage qualification can improve the likelihood of success.
Legal guidance can also help address related issues, such as property division, equity distribution, and ensuring the departing spouse is fully released from financial obligations.
A Meaningful Shift for Families
This legislative change offers divorcing homeowners greater flexibility and stability. By removing the need to refinance in many situations, it can help families:
- Remain in their homes
- Keep children in the same schools
- Maintain continuity during a period of transition
For many, this represents a practical and financially beneficial solution to one of divorce’s most complex challenges.