Maryland’s New Mortgage Assumption Law and the Marital Home

Maryland passed a law that changed the game for divorcing spouses and the marital home. Starting October 1, 2025, certain homeowners can now stay in their home after a divorce without having to refinance the loan. If both spouses sign the mortgage, a new clause in mortgages could permit one person to take over the other’s share, without having to refinance. With higher interest rates over the last few years, this is a game-changer for many divorcing couples.

At RPM Law, our Maryland family law attorneys can help you deal with divorce, the marital home, and much more. Get in touch today to get started.

Why Mortgage Assumption Matters in Maryland Divorces

For years, many Maryland couples faced a frustrating dilemma:

• One spouse wanted to keep the home for stability, especially when children were involved.
• But refinancing into a new loan meant giving up a low interest rate and taking on a much higher monthly payment.
• Lenders often refused to allow assumptions, even when federal guidelines permitted them.

The result was that many couples were forced to sell the home simply because refinancing was unaffordable.

Maryland’s new mortgage‑assumption law changes that landscape by requiring lenders to process and respond to assumption requests, particularly in divorce‑related transfers.

What the New Maryland Mortgage Assumption Law Does

The law, passed to address widespread lender delays and denials, creates a clear, enforceable process for mortgage assumptions in situations involving divorce, death, or other qualifying transfers.

Key features include:

• Mandatory lender response deadlines so homeowners are not left waiting months for an answer.
• Prohibition on unnecessary documentation, especially when the transfer is court‑ordered.
• Streamlined assumption procedures for spouses receiving the home in a divorce.
• Limits on lender fees, preventing excessive or arbitrary charges.
• Protection of the existing interest rate, allowing the assuming spouse to keep the original loan terms.

How Mortgage Assumption Works in a Maryland Divorce

When one spouse wants to stay in the marital home, the divorce agreement typically requires:

1. Transfer of title(usually via deed).
2. Removal of the departing spouse from the mortgage.
3. A timeline for completing the assumption or refinance.

Under the new law, the spouse keeping the home can apply to assume the existing mortgage, subject to lender approval. This process generally involves:

• Verifying income and creditworthiness
• Submitting required financial documents
• Paying a capped assumption fee
• Signing an assumption agreement
• Removing the other spouse from liability

Once complete, the assuming spouse becomes the sole borrower on the loan, and the departing spouse is released from future responsibility.

Benefits for Divorcing Maryland Couples

The new law offers several advantages that directly impact divorce negotiations:

1. Preserving Low Interest Rates

If the current mortgage has a lower interest rate, assumption allows the spouse keeping the home to retain that rate. This often saves hundreds or thousands per month compared to refinancing.

2. Making Buyouts More Feasible

When the mortgage payment stays low, the spouse keeping the home may have more room in their budget to buy out the other spouse’s equity.

3. Reducing Pressure to Sell

Couples who would otherwise be forced to sell due to unaffordable refinancing now have a viable alternative.

4. Faster Resolution

The law’s deadlines prevent lenders from dragging out the process, which helps divorcing couples finalize property division more efficiently.

Challenges and Limitations to Be Aware Of

While the new law is a major step forward, it does not guarantee approval. Important considerations include:

• The assuming spouse must still qualify based on income, credit, and debt‑to‑income ratios.
• Not all loans are assumable under the law, such as FHA, VA, and USDA loans. However, they may be assumable based upon their own language.
• Conventional loans may still be restricted, depending on lender policy.
• Equity buyouts require separate financing, even if the mortgage itself is assumed.

Courts cannot force a lender to approve an assumption, but they can set deadlines and

Understand How Mortgage Assumption May Work in Your Maryland Divorce

The mortgage assumption law can provide a powerful tool that preserves the marital home and a person’s ability to maintain it. It also helps avoid refinancing in unfavorable conditions, such as seeing your interest rates and monthly payments increase.

Our team at RPM Law are ready to help with your family law needs. Contact us today for a consultation.