How Student Loan Debt Effects New Mortgage Financing in Divorce

How Student Loan Debt Effects the Mortgage in Divorce

We have all seen many parents who have their own student loan debt or have co-signed student loans for their children. Mandating which spouse will be responsible for making those student loan payments in the divorce settlement agreements should be worded carefully to avoid any type of language traps.

Let’s assume that Mary co-signed for $50,000 in student loans for her son. The divorce settlement agreement states that Mary’s ex-husband, Sam, will be responsible for future educational expenses for their son. Mary’s understanding is that Sam will be responsible for making the payments on the existing $50,000 of student debt. Even if Sam’s interpretation is the same, from a mortgage perspective Mary will need to include the monthly payments for the student debt on her mortgage application because the divorce settlement agreement does not specify the existing debt.

In order to avoid the $50,000 of student debt negatively affecting Mary’s debt to income ratios when obtaining new mortgage financing, the divorce settlement agreement needs to specifically state that Sam will assume the responsibility of making the payment on the existing student debt including account numbers and specific loan amounts.

It is always important to work with an experience mortgage professional who specializes in working with divorcing clients. A Certified Divorce Lending Professional (CDLP) can help answer questions and provide excellent advice. To find a CDLP in your area, please click here.


This is for informational purposes only and not for the purpose of providing legal or tax advice. You should contact an attorney or tax professional to obtain legal and tax advice. Interest rates and fees are estimates provided for informational purposes only, and are subject to market changes. This is not a commitment to lend. Rates change daily - call for current quotations.