Can You Keep the House After Divorce? Qualification Requirements
Listen up, because we need to talk. What Happens to a House in a Divorce? The Reality Behind Property Division in California
In our episode with realtor Phylis Harb, from Harb & Co, we discussed the impact of LA Fires on the housing market and analyzed the 2025 housing numbers, particularly in the context of divorce.
While everyone's celebrating this so-called "exploding" housing market in California, there's a darker story brewing beneath all that glittery real estate data. In California, houses acquired during marriage are community property and must be divided equally between spouses. But the reality of how this plays out in 2025 is about to get real complicated, real fast.
What Happens to a House in a Divorce?
In California, houses acquired during marriage are community property and must be divided equally between spouses. This typically happens through:
Buyout: One spouse pays the other their 50% share of the equity
Sale: Both spouses sell the house and split the proceeds
Co-ownership: Both keep ownership (this is rare and usually messy)
Offset: One spouse keeps the house, the other gets equivalent value in different assets
Who Gets the House in a Divorce?
Either spouse can potentially keep the house, but they must meet some brutal financial requirements:
Qualify for a new mortgage to buy out their spouse's 50% share
Have sufficient income to afford payments as a single person
Come up with cash equal to half the home's equity
Get approval from their spouse or win the argument in court
And here's where it gets ugly: with median home prices hitting $1.45 million in the Bay Area and mortgage rates around 7%, most people simply cannot meet these requirements.
How Is the House Divided in Divorce? The 5-Step Reality Check
Let me walk you through exactly how this process unfolds, because understanding the mechanics will help you see why so many people are getting trapped:
Step 1: Property Valuation
A professional appraiser determines your home's current market value.
Step 2: Equity Calculation
Take the home's value, subtract what you still owe on the mortgage, and that's the equity you need to split 50/50.
Step 3: Decision Making
This is where couples either work together or lawyer up. Someone has to choose: buyout, sale, or asset offset.
Step 4: Financing (Where Dreams Go to Die)
The spouse keeping the house has to qualify for a new mortgage covering both the existing balance AND the buyout amount. (ouch!)
Step 5: Transfer
If someone actually manages to qualify, you transfer the deed and mortgage responsibility. If not, you're forced to sell.
Real-World Example: The $1.2M House Dilemma
Let me paint you a picture that's playing out in family law offices across California right now. Sarah and Mike bought their San Jose home in 2019 for $800,000. Today, it's worth $1.2 million with $200,000 left on the mortgage.
The Brutal Math of Divorce
Equity to split: $1,000,000 ÷ 2 = $500,000 each
If Sarah keeps the house: She needs $500,000 to buy out Mike bc she doesnt want to uproot the kids
New mortgage needed: $700,000 ($200,000 existing + $500,000 buyout)
Monthly payment: Roughly $4,700 at 7% interest
Required income as a single person: $200,000+ annually to qualify
How many people do you know making over $200,000 a year? Because I don't know many.
Nevertheless, Sarah makes $85,000 a year as a marketing manager. Mike makes $95,000 as an engineer. Together, they could afford the house. Apart? Neither one of them can even come close to qualifying for the buyout mortgage.
The Forced Sale Trap
So what happens when neither spouse can afford to buy out the other? They're forced to sell. But here's where the market data from that Newsweek article becomes relevant in the worst possible way.
Remember how San Francisco's housing inventory is "exploding"? That's because homes are sitting on the market longer. Buyers are getting pickier. Demand is cooling because regular people simply cannot afford these prices at 7% interest rates. Real estate analyst Nick Gerli warns we could see "sizable price drops" in the second half of 2025.
Translation: you might be forced to sell your house just as the market corrects and youll find yourself in a condo.
The Debt Division Double-Whammy
But wait, it gets worse. California doesn't just split assets, it splits debts too. Community debts accumulated during marriage get divided equally. So while you're trying to figure out how to handle your share of the house, you're also dealing with:
Credit card debt from when money was tight
Auto loans on cars you might not even want to keep
Business debts if either spouse was entrepreneurial
Tax liabilities that might stretch back years
Claery breaks it down clearly: "In addition to dividing assets, community debts are also divided between the spouses." It's not just about getting half of something good - you're also getting half of everything bad.
The Hidden Asset Horror
Here's where it gets truly ugly. Because housing values have shot up so dramatically, some spouses are getting creative about hiding assets. When your marital home alone represents $1.2 million in equity, the incentive to play dirty becomes overwhelming.
The family law experts at Claery & Hammond note red flags like "unexplained changes in financial behavior," "unusual asset transfers," and "complex financial structures." When the stakes are this high, people do desperate things. Maybe your spouse suddenly starts talking about refinancing to "invest in the business." Maybe they're pushing for a quick sale to a "friend" who's offering below market value.
Frequently Asked Questions
Q: Can I force my spouse to sell the house? A: If you can't reach an agreement, the court can order a sale and require you to split the proceeds equally.
Q: What if neither of us can afford to keep the house? A: You'll likely be forced to sell, even if the market timing isn't ideal for you.
Q: Can I keep the house if I can't qualify for a mortgage? A: Generally no, unless you can pay your spouse's share in cash or work out some other asset trade.
Q: What happens if my spouse is hiding assets? A: California has strict disclosure requirements. Your attorney can use legal discovery to uncover hidden assets.
Q: Can we both stay on the mortgage? A: Technically possible but financially dangerous. Most divorce attorneys strongly advise against this.
(See: It Doesn’t Have to be Ugly for More)
The Hidden Costs of "Winning"
Even if you somehow manage to keep the house, you might be setting yourself up for financial disaster. Taking on a mortgage payment that consumes 60-70% of your income leaves you house-rich but cash-poor. You can't afford to maintain the property, can't build other savings, and certainly can't handle any financial emergencies.
It's like being starving while locked in a grocery store, surrounded by wealth you can't actually access or use.
When to Get Legal Help
If you're facing divorce and own property in California, you need professional help navigating this maze. Look for attorneys who specialize in complex property division, especially in high-cost areas. They can help you:
Accurately value all marital assets
Identify if your spouse is hiding assets
Negotiate creative solutions for property division
Understand your realistic options given current market conditions
.
The Hard Truth of the American Dream
The house that was supposed to represent security and success has become a trap. The same appreciation that made you millionaires on paper might leave you bankrupt in reality. We're watching the American Dream become the American Nightmare, one divorce at a time.
The next time you see a headline about exploding housing markets, remember: for every winner in this game, there are losers sitting in divorce court, trying to figure out how to divide an asset that's become too expensive for either of them to actually own.
And that, friend, is the real cost of the housing boom nobody wants to talk about.
Want to sharpen your own relationship radar? Tune in to Season 6 of the Legally Uncensored Podcast. We’re here to untangle the messy, decode the complex, and tackle everything in the middle. Let's face it: love can feel like a battleground, and sometimes you need a savvy navigator to help you dodge those relationship landmines. Join us for the chat and dive into the conversation!