Four Provisions Worth Checking Before the Decree Is Entered
Program and regulatory figures verified October 10, 2026. Details change; confirm your scenario with us.
A short page for counsel. No pitch, no referral arrangement, the four financing points that most often turn an entered decree into a problem.
★★★ 1. The agreement has to address the refinance proceeds
Fannie Mae Selling Guide B2-1.3-02 conditions limited cash-out treatment on a written agreement signed by all parties stating "the terms of the property transfer and the proposed disposition of the proceeds from the refinance transaction."
★★★ A Texas decree that awards the homestead and imposes an owelty typically covers the first limb comprehensively. Whether it addresses the refinance proceeds is a separate question. ★★ Because the owelty is being documented anyway, this is usually a one-sentence addition in a draft, and a renegotiation once the decree is entered.
★★★ 2. Twelve months of joint ownership, to disbursement
Same provision: "jointly owned for at least 12 months preceding the disbursement date." It runs to funding, not filing; it is a title test rather than a marriage or occupancy test; and falling short does not prevent the loan but reclassifies it as cash-out.
★ Where the deed date is close, a closing window drafted a few weeks later changes the classification.
★★ 3. "Awarded" carries financing value
Selling Guide B2-1.3-03: "There is no waiting period if the lender documents that the borrower… was legally awarded the property (divorce, separation, or dissolution of a domestic partnership)", displacing the usual six-month on-title requirement; and the twelve-month seasoning of the loan being paid off "does not apply… when buying out a co-owner pursuant to a legal agreement."
★ Language that clearly awards the property does work that merely permitting a transfer may not.
★★★ 4. Which subsection of § 50 the lien lands in
You will know this better than we do, and we are not going to tell you how to structure it. We note only the financing consequence: a § 50(a)(6) route is capped at "80 percent of the fair market value of the homestead on the date the extension of credit is made", with fees capped at "two percent of the original principal amount".
★★★ Two practical notes from the lending side. First, that 80 percent is measured at closing, so in the four big Texas metros, all of which fell over the year to August 2026, the room under the cap can shrink between agreement and funding. The figures. Second, § 50(a)(6)(K) expressly tolerates other homestead debt "made for a purpose described by Subsections (a)(1)-(a)(5)", the range containing the owelty at (3).
★ Two more that affect capacity on both sides
- ★★ Support cuts both ways. Selling Guide B3-3.4-02 permits support as income only with a six-month receipt history and documented continuance of at least three years from application; the same obligation reduces the payor's capacity. ★★★ And: "Lump sum equalization payments are not considered a steady source of income."
- ★ Loan limits are not a Texas issue. All 254 counties at $832,750, so unlike California the agency rules reach a typical buyout. The figure
★ What is usually most useful
A short conversation while terms are in draft. We are glad to say plainly whether a contemplated buyout figure is financeable on one income, including when it is not, which is the answer that saves the most time.
★★ What this page is not
- ★★ Not a referral arrangement. We make no attorney referrals, ask for none, and pay and receive nothing for introductions.
- ★★★ Not structuring guidance. We do not advise on how an owelty should be created, documented or closed, or in what order. That is yours and the title company's.
- ★ Not a guarantee. Agency requirements read 2026-10-10; they change and carry lender overlays.
Mike Certo, NMLS #260555 · Cornerstone First Mortgage, NMLS #173855 · (480) 296-6513 · mcerto@cfmtg.com.
Frequently asked questions
What do Texas family law attorneys most often miss in a buyout?
The Fannie Mae requirement in B2-1.3-02 that the written agreement signed by all parties state the proposed disposition of the proceeds from the refinance, not only the terms of the property transfer. A Texas decree awarding the homestead and imposing an owelty usually covers the transfer thoroughly and is silent on the refinance proceeds.Does the Texas 80 percent cap change if the market falls?
The cap in section 50(a)(6)(B) is measured against the fair market value of the homestead on the date the extension of credit is made, so a value that has fallen between agreement and funding reduces the room under the ceiling at closing. All four of the largest Texas metros declined over the year to August 2026.Does this lender pay for attorney referrals?
No. We make no attorney referrals, ask for none, and pay or receive nothing for introductions. We also do not advise on how an owelty should be structured, documented or closed.Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about mortgage financing during and after a divorce. Not a loan commitment, and not legal, tax or financial advice. Cornerstone First Mortgage is a lender; it is not a law firm, does not represent any party to a dissolution, does not make attorney referrals, takes no position on how property should be divided, and does not advise on how an owelty of partition should be documented or closed. Texas homestead and property-division rules are set by the Texas Constitution and the Family Code and applied by the courts; homestead tax exemptions are administered by county appraisal districts. Agency requirements described here are Fannie Mae Selling Guide provisions current as of the date shown and are subject to change and to lender overlays. Housing market figures describe the twelve months to August 2026 and are not a forecast. All loans are subject to borrower, property and program qualification.