What debt-to-income ratio do I need?

There is no single number, because the limit depends on the loan program, your credit, your equity and the rest of the file. As a rough orientation, files comfortably under the mid forties tend to be straightforward, and files above the low fifties usually need a different path. Treat that as a rule of thumb rather than a cutoff.

Does the mortgage I am refinancing count against me?

The old payment is replaced by the new one in the calculation, so you are measured against the loan you will actually have. If you are also on another mortgage you are not refinancing, that one does count against you unless specific conditions are met.

Can I use a new job or a raise?

Usually yes, but a lender wants evidence it will continue, which normally means an offer letter or pay stubs and a history in the same line of work. A job you started last week in a new field is harder to use than the same job you have done for five years at a higher salary.

What if I am self-employed?

It is entirely doable and the documentation is different, because a lender works from your tax returns or, on some programs, from your bank statements rather than from pay stubs. Self-employed files take longer to put together, so start earlier.

Can you refinance on one income after a divorce?

Today One joint loan Both names on the note. The lender can pursue either of you for the whole balance.
→ ↓
At closing The new loan funds A new loan in one name pays off the old one, and pays the other spouse their share of the equity.
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After One loan, your name only The old note is gone, so the liability on it is gone with it. The deed is signed over separately.

A refinance replaces the joint loan with a new one. Signing the deed over does not do this on its own.

What the lender is actually measuring

A lender is answering one question: can this person, on their own, pay this loan every month for the whole term. Everything in the file exists to answer it.

Four things carry most of the weight.

Your income, documented. Not what you expect to earn, not what you earned before you cut your hours, but what you can evidence. For most people that is pay stubs and tax forms. For the self-employed it is tax returns, or on some programs business bank statements instead.

Everything you owe each month. Car loans, credit card minimums, student loans, and any support you pay. Support paid is a liability and it comes straight off what you can carry.

The new housing cost in full. Not just principal and interest. Property taxes, homeowners insurance, any association dues, and mortgage insurance where it applies. People routinely forget this and are surprised when the figure a lender uses is higher than the one they calculated at home.

The equity. How much of the home’s value the new loan represents. A buyout increases the loan, and a loan that climbs too close to the value of the house narrows the programs available to you.

The ratio, and why it is not a pass mark

Those numbers become a debt-to-income ratio: everything you owe each month, including the new housing cost, divided by your gross monthly income.

There is no single number that means yes. The limit moves with the loan program, your credit, your equity and how strong the rest of the file is, so a ratio that works on one program fails on another. As a rough orientation, files comfortably below the mid forties tend to go through without drama, and files above the low fifties usually need a different approach. Treat that as orientation and nothing more.

What matters more than the exact threshold is knowing your number before you apply, because it tells you which lever to pull.

A worked example

Here is a file of the kind that comes up constantly, with the numbers a lender would actually be working from.

You earn $9,000 a month before tax. You pay $1,200 a month in support. You have a car payment of $450 and credit card minimums of $150.

The house is worth $520,000 and the joint loan has $300,000 left on it. The decree gives your ex half the equity, so the buyout is $110,000, and with estimated costs of $15,600 the new loan comes to $425,600.

Your monthly obligations are the new housing cost plus $1,800 of existing debt and support. Your qualifying income is $9,000, because none of the support here comes to you.

Whether this works turns entirely on what that new housing cost comes to, which depends on the term and on the rate you are actually offered.

Put your own figures into the divorce house buyout calculator and it will do this arithmetic and tell you where you land. It uses your own rate estimate, because nobody can quote you anything without seeing your file.

The levers when it is tight

If the ratio comes out close, there are a handful of things that genuinely move it, and a lot of things that do not.

Pay off a small debt with a large payment. A car loan with eleven payments left can be worth more to your ratio than its balance suggests, because the whole monthly payment comes out of the calculation.

Take a longer term. A thirty year term produces a smaller monthly figure than a fifteen, which makes the ratio easier even though it costs more over the life of the loan. That is a real tradeoff, not a trick.

Reduce the buyout. If the decree is not final, the buyout is a negotiable number, and other assets can be used to balance the split instead. A retirement account offset is a very common way to keep the loan smaller.

Add a co-borrower. A family member’s income joins the file, and so does their name on the debt. It works, and it is a serious thing to ask of someone.

Change the program. If a conventional loan does not fit, a different program may, including options built around bank statements rather than tax returns for the self-employed. These exist precisely for files that are sound but do not fit a standard box.

What to do first

Work out your number before anything else, because it determines what you should be negotiating in the decree. A buyout you cannot finance is not a settlement, it is a problem scheduled for later. Get the estimate, then build the agreement around something that can actually be funded.

Where you are matters

Alex is licensed in California, Florida, Georgia, Virginia, Washington, Arizona, Tennessee, Colorado and Idaho. Property and divorce law is state law, so the same facts can land differently depending on where the house is.

Florida

Florida qualifying works the same way as anywhere else, with one local wrinkle worth planning for: property insurance in much of the state is a large and volatile part of the monthly cost, and the lender counts it in full. A quote that is a year old can be badly out of date, and an insurance figure that comes in higher than expected is one of the more common reasons a Florida file that looked comfortable turns tight. Get a current quote early.

California

California qualifying works the same way as anywhere else, but the loan amounts are often large enough that small changes in the rest of the file move the outcome. Property taxes are generally based on assessed value, and a transfer done incorrectly during the divorce can trigger a reassessment that raises the monthly cost permanently and can push a borderline file out of reach. Settle the title transfer properly before counting on the numbers.