I am lost and genuinely don’t know how to move forward.

I (28m) caught my wife (28f) straddling my friend and kissing on him. We’ve been married for almost 7 years together for 12. My friend has been living with us after a nasty divorce getting him kicked out of the military. I had 0 reason to suspect anything until I caught them as we’ve all always gotten along well and our arrangement was (I thought) working well.

It’s important to note I have been dealing with a lot of issues in my career and it was severely impacting my personal mood. We’ve been working together to grow as a couple the last few years as I was overcoming some nasty habits (bad communication, distant, irritable) and I thought we were making good progress but still in a rough spot. My friend is a generally super supportive person and it makes sense why she would talk to him and seek emotional support and validation. But I never imagined the level of betrayal that they would do to me. She swears up and down they never slept together and only kissing petting and fantasies etc.

I guess my question to everyone is. Is there hope for my relationship? I do love her dearly and the thought of divorce brings me to emotional breakdown but I don’t know how to move forward. I never imagined I would lose trust in and be betrayed by one of my better friends and wife. I am trying not to make any rash decisions but I am kicking my friend out and cutting ties. I can’t tolerate the thought of my friend living with me rent free eating my food at no cost and trying to sleep with my wife. I doubt I will reconcile that friendship but I can’t stand the thought of losing my wife.

tl;dr I caught my wife straddling and kissing my friend who is/was living with us.