To take someone off a mortgage, the remaining borrower either assumes the existing loan or refinances it into their own name; lenders will not simply cross a co-borrower off the note. Both routes require the person staying on the loan to pass a full credit and income review, and the options available depend on whether the mortgage is FHA, VA, or conventional. Changing the loan also does not change who owns the home, so a title transfer is almost always a second, separate step.
Why a Name Can’t Just Be Removed
When two people sign a promissory note, each one is individually responsible for the entire balance, not half of it. The lender can pursue either borrower for the full amount if payments stop. That shared liability is priced into the loan. Releasing one borrower means the lender loses a source of repayment, so the servicer needs proof the remaining borrower can carry the debt alone before agreeing to any change.
Assuming the Existing Loan
An assumption lets the remaining borrower take over the current mortgage with the same rate, balance, and terms, while the departing borrower is formally released from the debt. Request an assumption package from your loan servicer to start. The package contains the applications the servicer uses to decide whether you qualify to hold the loan on your own.
Underwriting looks a lot like a new mortgage application. Plan to provide recent pay stubs, W-2s, or tax returns covering at least two years of employment, and expect the servicer to pull your credit. You will also need a legal basis for the transfer, such as a certified divorce decree, a death certificate, or another court order explaining why the co-borrower is coming off.
The servicer applies the same credit standards used for new mortgage applications.1Freddie Mac. Guide Section 8406.2 – Transfers of Ownership, Assumptions and Releases of Liability Processing typically takes 45 to 90 days, though divorce- or death-related assumptions can move faster. If you qualify, the servicer issues a release of liability, the formal document that frees the departing borrower from any future obligation on the loan.2HUD.gov. Chapter 7 – Assumptions
Which Loans Allow Assumption
Whether assumption is available depends on who backs your mortgage.
All FHA-insured mortgages are assumable. For loans closed on or after December 15, 1989, the person taking over must pass a full creditworthiness review, and that requirement lasts the life of the loan. If someone assumes an FHA loan without going through approval, the lender can accelerate the balance and demand full repayment. Once the assuming borrower is found creditworthy, the lender is required to release all original parties from liability.2HUD.gov. Chapter 7 – Assumptions
VA-backed loans are also assumable, and a non-veteran can assume one. There is a catch for the original veteran borrower: if a non-veteran assumes the loan, the veteran’s home loan entitlement stays tied up until the loan is paid off, and the veteran cannot use that entitlement to buy another home with a VA loan. Entitlement is restored only if the person assuming the loan is an eligible veteran who substitutes their own.3Veterans Benefits Administration. VA Assumption Updates Circular 26-23-10 VA assumptions also carry a funding fee of 0.5% of the loan balance.4Veterans Affairs. VA Funding Fee and Loan Closing Costs
Conventional mortgages are generally not assumable. Nearly all conventional loan contracts include a due-on-sale clause, which lets the lender demand full repayment if the property or any interest in it is transferred without written consent, and federal law lets lenders enforce those clauses.5Office of the Law Revision Counsel. 12 USC 1701j-3 – Preemption of Due-on-Sale Prohibitions For most conventional loans, refinancing is the realistic path unless the transfer fits one of the federal exemptions below.
Refinancing Into One Name
When assumption is off the table, refinancing replaces the existing mortgage with a brand-new loan in only the remaining borrower’s name. Paying off the old loan in full ends the departing co-borrower’s obligation automatically.
The remaining borrower applies independently. The lender reviews income, credit history, and existing debts to decide whether you qualify solo. A new appraisal is typically ordered to confirm the property’s current value supports the loan. If the appraisal comes in low, you may need to bring cash to closing to cover the gap, or dispute the appraisal if it contains errors.
At closing, the new lender wires the payoff to the original servicer, the settlement agent records the new mortgage with the county, and the original servicer issues a satisfaction of mortgage once payoff clears.6Fannie Mae. C-1.2-04, Satisfying the Mortgage Loan and Releasing the Lien Closing costs vary but generally run several thousand dollars, covering the appraisal, origination, title insurance, and recording.
If you already have an FHA or VA loan, a streamline refinance can cut some paperwork, but when the refinance removes a borrower, the lender must use credit-qualifying procedures. The remaining borrower still goes through income verification and a credit check.7FDIC. Streamline Refinance
Divorce, Death, and Family Transfers
The Garn-St. Germain Act carves out situations where lenders cannot enforce a due-on-sale clause, even on a conventional mortgage. If your transfer fits one of these categories, the lender cannot accelerate the loan simply because ownership changed:
- A transfer to a relative when a borrower dies, or an automatic transfer under the law when a joint tenant or co-owner dies.
- A transfer to a spouse under a divorce decree, legal separation agreement, or property settlement.
- Any transfer that makes the borrower’s spouse or children an owner of the property.
- A transfer into a living trust where the borrower remains a beneficiary and continues living in the home.
These protections apply to residential properties with fewer than five units.5Office of the Law Revision Counsel. 12 USC 1701j-3 – Preemption of Due-on-Sale Prohibitions
One important limit: the exemption keeps the lender from calling the loan due, but it does not release the departing borrower from personal liability. To get an actual release, you still need a formal assumption or a refinance. Your ex-spouse’s name stays on the debt until the lender agrees in writing to remove it, no matter what the divorce decree says.
Transferring the Title Is a Separate Step
Changing the mortgage does not change who owns the property. These are two separate records, and you have to update both. A co-borrower removed from the mortgage but left on the title still has an ownership interest. Someone removed from the title but left on the mortgage still owes the debt without owning the home that secures it.
To transfer ownership, the departing co-owner signs a deed giving up their interest, usually either a quitclaim deed or a warranty deed. A quitclaim deed transfers whatever interest the person has, without guaranteeing the title is clear. A warranty deed includes a promise that the title is free from defects. Both need a precise legal description of the property, both parties named, and a notary. Once signed, the deed goes to the county recorder to become part of the public record. Recording fees typically run $25 to $50 per page, though some counties charge more. Notary fees generally run $5 to $15 per signature, with limits set by state law.
A quitclaim deed does not wipe out liens or judgments attached to the property. If the departing owner had a tax lien or court judgment recorded against the home, that lien follows the property to the new sole owner. The new owner would not be personally responsible for the other person’s debts, but the lienholder could still foreclose on the property to satisfy the debt. Check the title for existing liens before accepting a quitclaim deed. Existing title insurance can also be affected by a deed transfer, so review your owner’s policy before recording, and consider a new policy if coverage is unclear.
Tax Consequences to Watch For
Moving a property interest can trigger tax obligations that catch people off guard. The specifics depend on the relationship between the parties and the reason for the transfer.
If one co-owner transfers their equity to the other and receives nothing in return, the IRS may treat it as a gift. For 2026, the annual gift tax exclusion is $19,000 per recipient.8Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Equity transfers between spouses, including those made as part of a divorce, are generally exempt from gift tax. Transfers between unmarried co-owners above the exclusion amount may require a gift tax return.
Capital gains matter down the road. When you sell a primary residence, you can exclude up to $250,000 in capital gains as an individual, or up to $500,000 on a joint return with your spouse.9Internal Revenue Service. Topic No. 701, Sale of Your Home After a divorce where one spouse keeps the home, the remaining owner’s exclusion drops to $250,000 on a later sale. That matters if the property has appreciated a lot.
Once a co-borrower is removed, only the person legally obligated on the loan who actually makes the payments can claim the mortgage interest deduction. If a divorce or separation agreement requires one spouse to pay mortgage interest on a home the other spouse owns, the IRS may treat those payments as alimony rather than deductible mortgage interest.10Internal Revenue Service. Publication 936, Home Mortgage Interest Deduction
Some states and counties charge a documentary transfer tax whenever a deed is recorded. The tax is usually calculated on the property’s value or the consideration exchanged, and in some places an existing mortgage counts toward that amount even when the debt is being assumed rather than paid. Transfers between divorcing spouses are often exempt, but rules vary. Check with your county recorder before filing to avoid a surprise bill.
If the Remaining Borrower Can’t Qualify Alone
Not everyone can pass an assumption review or qualify for a refinance solo. When income, credit, or debt load falls short, the options narrow:
- Sell the property. Selling pays off the mortgage in full and frees both borrowers. Each co-owner takes their share of any remaining equity.
- Wait and rebuild. If the shortfall is temporary, six to twelve months of steady income and lower debt balances may be enough to reapply successfully.
- Ask a court to force a sale. When co-owners cannot agree, either party can file a partition action asking a court to order a sale or division. It costs money and takes time, but it works when voluntary cooperation fails.
- Keep both names on the loan. If nothing else works, both borrowers stay liable. A divorce court can assign payment responsibility to one spouse, but the lender is not bound by that order.
The most common mistake in this situation is signing a quitclaim deed to hand over ownership without dealing with the mortgage first. The person who gives up the property but stays on the loan ends up responsible for a debt secured by a home they no longer own and cannot control. Resolve the mortgage before or at the same time as any title transfer, not after.