Mortgage News and Notes

Using Alimony or Child Support to Qualify for a Mortgage

May 12th, 2015 11:08 AM by Steven Hofberg

If you are using alimony or child support income income to obtain a mortgage, there are a few updates to the requirements that you should know. In order to use support payments as qualifying income, you will need:

1.  Separation Agreement

  • A signed Separation Agreement or Court Order is required.
  • The Agreement must be complete and fully executed.
  • It must reference the exact amount of support and timeframe of payments.
  • The amount of support must be a specific number and not a percentage of payor’s income.

2.  Documentation of Support History

  • The client must have at least 6 months history of support in order to close the loan. Some programs require as many as 12 month’s history.
  • The support money needs to come from an account in paying spouse’s name only.
  • The support money needs to be deposited into an account in receiving spouse’s name only.
  • Each support payment should be deposited separately from other checks.
  • Support can begin before the Agreement is signed as long as the payments are not less than the support per the agreement.

3.  Documentation of Continued Support

  • Support must continue for at least 3 years from the mortgage application date.
  • If different amounts will be paid during the 3 years, the lowest amount will be used to qualify
  • Support must be in the form of a monthly payment. It cannot be a lump sum payment or annual payments to use as qualifying income.
  • Child support can be grossed up by 125% for qualifying purposes.

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