For many Maryland families navigating divorce, one of the most emotionally charged and financially complex decisions is what to do with the marital home. The house isn’t just a piece of property, it’s where family memories were created, routines were established, where children made their bedrooms and celebrated milestones. At its core, the marital family home is the physical manifestation of stability in a family. Therefore, the division of the home in the event of a divorce is often one of the most contentious issues.
The task of agreeing whether or not either party can remain in the home is never simple, and this is oftentimes the case because there are inescapable economic realities to grapple with. Specifically, the existence of financing attached to both parties. There is no doubt that if one spouse is vacating the home, the understanding will be that the vacating party will be released from the financial obligation associated with the loan, leaving very limited options to the spouse remaining in the home. Burdensome interest rates, high closing costs, and the challenge of qualifying for a new loan alone often make refinancing impracticable. As a result, many families are forced to sell their home or remain financially entangled with their ex-spouse through a shared mortgage.
But starting October 1, 2025, Maryland is offering a new path forward. House Bill 1018 will require lenders to allow eligible divorcing homeowners to now assume their existing mortgage without refinancing. That means the assuming party keeps their existing loan terms including the same interest rate and the same monthly payment, but no more shared liability with your ex. This law is a major step forward in helping families preserve economic stability during the divorce process.
What Is Mortgage Assumption?
A mortgage assumption is when one party takes over (“assumes”) another party’s existing mortgage loan as opposed to just taking out a brand-new mortgage. In the context of a home mortgage where two divorcing parties are jointly liable, an assumption allows one party to “assume” the other party’s financial obligation whilst maintaining the loan terms of the underlying loan and thus avoiding the need to refinance the loan with different loan terms. While the assuming party does not need to submit a new loan application or pay closing costs or appraisal fees, an eligibility process is still a feature of an assumption.
With interest rates significantly higher than they were just a handful of few years ago, refinancing often results in a much more expensive monthly payment. Therefore, for many families, an assumption is the only way to maintain a family home.
With HB 1018, Who Qualifies and When?
The law applies to:
- Conventional home mortgage loans (for example, privately arranged loans, not those insured or guaranteed by federal government programs) issued by non-depository conventional mortgage lenders
- New mortgages issued after October 1, 2025
- Existing mortgages, if the divorce decree is entered on or after October 1, 2025
This means even if you purchased your home years ago, you may still benefit from this law, so long as your divorce is finalized after the effective date. It’s important to note that the law doesn’t automatically apply to every mortgage. It specifically targets conventional loans, which are commonly used by Maryland families when purchasing a home.
Exceptions to Know
While the law covers most conventional mortgages issued by non-depository conventional mortgage lenders, it does not automatically apply to:
- FHA (Federal Housing Administration) loans
- VA (Veterans Affairs) loans
- USDA (U.S. Department of Agriculture) loans
- Mortgages held by large depository national banks such as Wells Fargo, Chase, or Bank of America
However, assumption may still be possible with these types of loans, but the mandated disclosureof HB 1018 will not attach to these loans. Each lender has its own policies and procedures, and with the right legal strategy, assumption may still be achievable.
Real-World Impact
Let’s say you and your spouse refinanced your home in 2021 with a 3.25% interest rate. In 2025, that rate might be closer to 6.5%. If you’re awarded the home in your divorce, refinancing into a new loan could double your monthly payment, not to mention force you to pay thousands in closing costs and fees. Under the new law, you may have a strong position when discussing options with your mortgage lender to keep your original mortgage, your original rate, and your original payment. That’s not just a financial win, it’s a lifeline.
This change can help:
- Keep children in their existing schools
- Preserve familiar routines
- Maintain emotional and financial stability
- Avoid the stress and cost of selling and relocating
Why Legal Guidance Matters
Even though many lenders operating in Maryland will soon be required to offer assumption in qualifying cases, they still have discretion in approving the spouse who wishes to take over the mortgage. That’s where skilled legal counsel becomes essential. Understanding the qualification parameters and existing lender requirements will improve qualification chances.
A Path Toward Stability
Divorce is never easy, but losing your home doesn’t have to be part of the process. With Maryland’s new mortgage assumption law, families can stay rooted in the place they’ve built together without the financial burden of refinancing or the emotional strain of selling.
If you’re considering divorce and want to explore your options for keeping your home, contact me today to discuss your options.
