Maryland divorce reshapes who pays the mortgage and who keeps the marital home, and a major 2025 law now lets one spouse assume the existing loan without refinancing. The marital home is divided under equitable distribution per Md. Code, Family Law § 8-205, the divorce filing fee is approximately $165, and courts may grant exclusive use and possession of the home for up to three years under Md. Code, Family Law § 8-208. This guide explains your mortgage divorce Maryland options in 2026.
Key Facts: Mortgage and Divorce in Maryland
| Factor | Maryland Rule (2026) |
|---|---|
| Filing Fee | $165 (range $165–$215 by county) |
| Waiting Period | 6-month separation ground; no fixed post-filing wait |
| Residency Requirement | None if grounds arose in MD; otherwise 6 months |
| Grounds | No-fault only (6-month separation, irreconcilable differences, mutual consent) |
| Property Division Type | Equitable distribution (fair, not necessarily 50/50) |
| Mortgage Assumption Law | Effective Oct. 1, 2025 (SB 689/HB 1018) |
| Use & Possession of Home | Up to 3 years post-divorce (§ 8-208) |
As of January 2026. Verify filing fees with your local Circuit Court clerk.
Is the Marital Home Divided Equally in a Maryland Divorce?
The marital home is not automatically divided 50/50 in Maryland. Maryland is an equitable distribution state under Md. Code, Family Law § 8-205, meaning courts divide marital property fairly based on 11 statutory factors, not by an equal split. While many judges use 50/50 as a starting reference point, the final division depends on each spouse's contributions, economic circumstances, and the marriage duration.
Maryland courts follow a three-step process. First, the court classifies each asset as marital or non-marital property. Property acquired during the marriage is generally marital, while property owned before marriage, inherited, or received as a gift is typically non-marital. Second, the court values the marital property as of the divorce date. Third, the court grants a monetary award or transfers property interests to balance the equities. The home's equity, calculated as fair market value minus the outstanding mortgage balance, is the marital asset subject to this division. A house worth $500,000 with a $300,000 mortgage represents $200,000 in divisible equity, regardless of how the deed is titled.
What Are My Three Options for the Mortgage in a Maryland Divorce?
Divorcing Maryland spouses have three primary options for the mortgage: sell the home and split proceeds, assume or refinance to remove one spouse, or co-own temporarily. Each option carries different costs, timelines, and credit consequences. Selling typically nets each spouse roughly half the equity after a 6% agent commission and closing costs. Removing a spouse from the mortgage requires either the new 2025 assumption law or a refinance.
The first option is selling. Both spouses split net proceeds after paying the mortgage balance, agent commissions (typically 5–6%), and transfer taxes. Maryland charges a state transfer tax of 0.5% plus county recordation taxes. The second option is one spouse keeping the home, which requires removing the other spouse from the mortgage through assumption or refinancing, and usually buying out their equity share. The third option is continued co-ownership, where both spouses remain on the mortgage temporarily, common when use and possession is awarded under § 8-208. Continued co-ownership keeps both names on the loan, meaning both credit scores remain exposed to any missed payment, even by an ex-spouse who has moved out.
How Does Maryland's New Mortgage Assumption Law Work?
Maryland's mortgage assumption law, effective October 1, 2025, requires conventional lenders to let a divorcing spouse assume the existing mortgage without refinancing. Enacted as Senate Bill 689/House Bill 1018 and codified in the Financial Institutions Article, the law lets the spouse keeping the home preserve the original interest rate and loan terms, provided they independently qualify under Maryland Department of Housing and Community Development (DHCD) guidelines.
This law addresses the "interest rate trap." Refinancing a 3% mortgage from 2021 into a 7% loan in 2026 can add $1,500 or more to the monthly payment, a shock that previously forced many Maryland families to sell. Under mortgage assumption divorce rules, the assuming spouse steps into both borrowers' position on the existing loan, the departing spouse is released from the debt, and the low rate survives. The mortgage servicer must accept the assumption application and provide written notice of approval or denial. To trigger these protections, your marital settlement agreement must contain specific language mirroring the Financial Institutions Article and clearly award the home to one spouse.
Can I Remove My Spouse From the Mortgage Without Refinancing?
Yes. As of October 1, 2025, you can remove your spouse from the mortgage through assumption under Maryland's SB 689/HB 1018, avoiding a costly refinance. Before this law, removing a spouse from a mortgage required either refinancing into a new loan or selling the home. Now, conventional lenders must permit a qualifying spouse to assume the existing loan and release the departing spouse from liability.
Releasing the departing spouse from liability is critical. Without a formal release, the old mortgage still counts against that spouse's debt-to-income (DTI) ratio, making it nearly impossible to qualify for a new home loan. Removing spouse from mortgage obligations protects both parties: the staying spouse keeps the favorable rate, and the leaving spouse regains borrowing capacity. However, lenders sometimes resist these assumptions because they prefer issuing higher-rate refinances. If your conventional loan predates the law or the lender denies a qualified assumption, refinancing remains the fallback. Government-backed FHA and VA loans have long allowed assumptions and may also be options for removing one spouse from the mortgage responsibility.
Does Assuming the Mortgage Buy Out My Spouse's Equity?
No. Assuming the mortgage does not provide cash to buy out your spouse's equity share. This is the central limitation of Maryland's 2025 assumption law. If the home has $200,000 in equity and each spouse is entitled to $100,000, the assuming spouse must still fund that $100,000 buyout from other assets, a separate loan, or trade-offs in the property settlement.
Under the old approach, spouses often used a cash-out refinance to pull equity from the home and pay the departing spouse. Mortgage assumption divorce mechanics break that link because assumption preserves the existing loan amount without adding new debt. The spouse keeping the home must find buyout funds elsewhere. Common solutions include offsetting the equity against other marital assets such as retirement accounts, taking a separate home equity loan after the assumption closes, or structuring an installment buyout in the settlement agreement. Couples should value the home through a formal appraisal before negotiating the buyout, because the equity figure drives the entire calculation. Working with both a Maryland family law attorney and a mortgage professional helps structure a buyout that satisfies both spouses.
Who Pays the Mortgage During a Maryland Divorce?
During a Maryland divorce, the spouse who remains in the home is typically responsible for the mortgage, but the court can allocate payment differently through a pendente lite order. Under Md. Code, Family Law § 8-208, when a court awards use and possession of the family home, it also allocates the financial responsibilities, including mortgage, taxes, and insurance, between the spouses.
Mortgage responsibility divorce questions often arise before the divorce is final. Until the court enters an order, both spouses on the loan remain legally liable to the lender regardless of who lives in the house. A missed payment damages both credit scores. If the court grants use and possession to the custodial parent, the order specifies who pays the mortgage during that period, which can last up to three years. Importantly, when one spouse makes mortgage payments after divorce while holding use and possession, the court may later credit those payments when dividing sale proceeds. To protect yourself, keep both names current on the mortgage until a written order or settlement agreement reassigns responsibility, and document every payment you make.
What Happens If Our Maryland Home Is Underwater?
If your Maryland home is underwater, meaning the mortgage balance exceeds the home's value, the negative equity becomes a marital debt divided under equitable distribution principles. An underwater mortgage divorce reverses the usual analysis: instead of dividing equity, the court allocates responsibility for the shortfall between the spouses based on the § 8-205 factors.
Underwater mortgage divorce situations create difficult choices. Selling an underwater home through a short sale requires lender approval and may leave both spouses owing the deficiency, which damages credit. One spouse may agree to keep the home and the negative-equity loan in exchange for concessions elsewhere in the settlement. Because Maryland values marital property as of the divorce date, a home that recovers value later does not change the at-divorce calculation. Some couples choose to keep co-owning an underwater home temporarily, waiting for the market to recover before selling, though this keeps both names on the loan and both credit profiles at risk. A Maryland attorney can structure an agreement that allocates the deficiency fairly and protects both parties from future lender claims.
Can I Stay in the House With My Children After a Maryland Divorce?
Yes. Maryland courts can award you exclusive use and possession of the family home for up to three years after divorce when minor children are involved, under Md. Code, Family Law § 8-208. This authority exists regardless of how the home is titled and is designed to keep children in a familiar environment and community during the transition.
To qualify for use and possession, the home must have been the family's principal residence during the marriage, must be owned or leased by one of the spouses, and must be used as a residence by a parent and at least one minor child after the divorce. The court weighs each spouse's interest in occupying the home, any income-production use, and the hardship imposed on the spouse whose interest is restricted. Even within the three-year cap, the order ends earlier if the youngest child reaches the age of majority or if the spouse with possession remarries. Use and possession is temporary and does not change ownership. When the order expires, the court may order the home sold and proceeds divided, or allow one spouse to buy out the other.
How Much Does It Cost to File for Divorce in Maryland?
The filing fee for an absolute divorce in Maryland is approximately $165, charged by the Circuit Court clerk in the county where you file. Total costs range from $165 to $215 depending on the county, and additional charges may apply for service of process and document copies. Maryland eliminated limited divorce on October 1, 2023, so all divorces are now "absolute divorce."
The filing fee is set under Md. Code, Courts and Judicial Proceedings § 7-202 and collected per the statewide clerk fee schedule. As of January 2026, verify the exact amount with your local Circuit Court clerk, because counties periodically adjust their schedules. Montgomery County, for example, accepts cash, check, money order, Discover, MasterCard, and Visa, but not debit cards or American Express. If you cannot afford the fee, Maryland law allows you to request a fee waiver from the court. File your divorce in the Circuit Court for the county where either spouse resides, or where the defendant is regularly employed or does business.
What Are the Residency and Grounds Requirements for a Maryland Divorce?
Maryland requires no minimum residency if the grounds for divorce occurred in Maryland; otherwise, you or your spouse must have lived in Maryland for at least six months before filing, under Md. Code, Family Law § 7-101. Maryland now recognizes only three no-fault grounds for absolute divorce under Md. Code, Family Law § 7-103.
Since October 1, 2023, the three grounds are: six-month separation (living separate and apart for six months, which may include living under the same roof while leading separate lives), irreconcilable differences (no separation period required), and mutual consent (requires a signed settlement agreement resolving property, custody, and support). Fault grounds such as adultery and cruelty were eliminated as standalone grounds, though fault-related circumstances may still influence property division and alimony under the § 8-205 factors. The six-month separation rule no longer requires separate households, a significant change that lets some spouses remain in the same home for financial reasons while their divorce proceeds. Military members who established Maryland residence before service may also file in Maryland.