Separating from a partner is hard enough without the stress of figuring out what to do with the family home. In Canada, you have three real options — and the rules around one of them (the federal Spousal Buyout Program) are far more generous than most people realize. Here is the 2026 guide. The Three Real Options One spouse buys out the other — using the Spousal Buyout Program or a conventional refinance Sell the home and split the proceeds Co-own for a fixed period (joint ownership / nesting), usually structured by a separation agreement Most separating couples in 2026 choose option 1 or 2. Option 3 is rare unless there are minor children and both parents want to maintain the home. Option 1 — The Spousal Buyout Program (CMHC / Sagen) This is the program that surprises most clients. CMHC and Sagen both offer a Spousal Buyout Mortgage that lets one spouse refinance up to 95% of the home's appraised value to: Pay out the other spouse's share of equity Pay off joint debts assigned to one spouse in the separation agreement Pay legal fees related to the separation Why this matters: Standard refinances cap at 80% LTV. The Spousal Buyout Program effectively gives you 15% extra equity room specifically for separation purposes. Requirements A signed separation agreement or court order outlining who gets what The remaining spouse must qualify on their own income (full GDS/TDS + stress test) Property must be the matrimonial home Both spouses must currently be on title Standard insurer rules apply (max $1.5M purchase price, 30-yr amortization for first-time buyers on new builds, 25-yr otherwise) Real Example Couple separating, Brampton. Home worth $850K, joint mortgage $400K, joint LOC $40K. Wife is keeping the home. Equity = $450K → Husband's 50% share = $225K Wife needs: $400K mortgage + $225K buyout + $40K LOC payoff = $665K 80% LTV limit = $680K (so a regular refi works here, barely) 95% LTV via Spousal Buyout Program = $807K (massive cushion) Insurance premium on the new $665K loan ≈ 4.00% = $26.6K added to mortgage She qualifies on her own income at the new payment, signs the separation agreement first, and closes the buyout 30-60 days later. Husband signs off title; wife is now sole owner. [CTA] Option 2 — Sell and Split Sometimes the cleanest path is to sell. Reasons: Neither spouse can afford the home alone Both want a fresh start The numbers do not work even with the Spousal Buyout Program Costs to model: Real estate commission (typically 4%-5% in Ontario, 6%-7% in BC) Legal fees ($1,500-$2,500) Mortgage prepayment penalty (3 months interest OR IRD — get this in writing) Capital gains: none if it was your principal residence Timing: Most separation agreements specify a sale window (e.g. "within 90 days of signing"). Plan listing around school year and seasonal market. Option 3 — Co-Ownership / Nesting Both spouses remain on title and on the mortgage, often with one spouse moving out and contributing to the mortgage as part of support payments. Pros: Stability for kids, no rushed sale Cons: Both credit reports show the joint mortgage; either spouse's late payment hurts both. Hard to qualify for a new mortgage individually while still on the joint one. We generally recommend a clear sunset date in the separation agreement (e.g. "sell or refinance by [date]") to avoid an indefinite joint liability. Credit and Tax Watch-Outs You are still on the mortgage until you are removed from title and the loan. A separation agreement alone does not release you. Until the lender formally discharges you, late payments hurt your credit. Spousal/child support is income for the receiving spouse for mortgage qualification — but only if there is a court order or written agreement and 6+ months of receipt history. Spousal/child support is a debt for the paying spouse — it counts in TDS and reduces buying power. Equalization payments are not taxable between spouses on transfer. Land transfer tax exemption applies in most provinces when one spouse transfers title to the other under a separation agreement. What to Do First Sign a separation agreement. No lender will offer the Spousal Buyout Program without one. Get an independent appraisal of the home (not just MLS estimates). Get a payout statement from the existing lender, including penalties. Pre-qualify the staying spouse on their own income. If they cannot qualify even at 95% LTV, the buyout is not viable. Plan the close date to align with the agreement — usually 30-60 days after signing. [CTA] Ready to Get Started? Contact us today for personalized mortgage advice and competitive rates. Get Pre-Approved Call (416) 822-7357 Frequently Asked Questions Q: Do common-law couples qualify for the Spousal Buyout Program? A: Yes — most provinces grant common-law partners the same property rights after a defined cohabitation period (typically 2-3 years). Q: Can my parents help me qualify for a buyout? A: A co-signer can boost your qualifying numbers. They must also be on title. Q: What if I cannot qualify even with 95% LTV? A: Either negotiate a smaller buyout (with offsetting concessions in the separation agreement), or sell. Q: Does the stress test apply to a Spousal Buyout? A: Yes — full federal stress test applies. The 95% LTV is the only exception; the qualifying rate is unchanged.
