In addition to wages and other income sources, divorced/separated borrowers who receive alimony/separate maintenance and child support payments can use that income to qualify if they so choose. That income is eligible to be included in their qualifying income if it meets certain criterion.
When applying for a mortgage, you’ll need to submit proof of all your income sources. Lenders recognize alimony payments and Child Support as a legitimate source of income. Alimony, also known as spousal support or spousal maintenance, is a payment from one spouse to another following a divorce. It provides financial support and is considered when determining mortgage eligibility.
By including alimony payments in your income calculations, you can potentially qualify for a larger mortgage. Remember that alimony differs from child support. Alimony payments are based on factors such as the length of the marriage, earning capacity of both spouses, and the reason for divorce. You don’t need to have children to receive or pay alimony.
To count alimony as income, you must have a documented history that your ex-spouse has consistently made alimony payments for at least 6 months. Additionally, if your ex-spouse owes at least 3 more years of alimony payments, it can be considered as part of your income. You must also provide documentation such as a court order or marital separation agreement specifying the amount of the payments and the length of time they will continue.
d.) Child Support longevity
To count child support as income, the support needs to be available for at least three years. Child support typically ceases when a child reaches a certain age or milestone in life. The borrower must show proof that the child will meet that standard for the following three years. For example, if the agreement states that child support will continue until the child is 18 years old, child support paid in relation to a 16-year-old child will not be counted as income for qualifying purposes.
Individuals Paying Alimony and Child Support:
If you’re the one paying child support and/or alimony, lenders view these payments as debt rather than income. Child support and alimony are court-ordered payments from one parent to another following a divorce. Child support typically ends at a certain age of the child, while alimony has different factors determining its longevity.
b.) Impact on Debt-to-Income Ratio (DTI):
Child support and alimony affect your debt-to-income ratio (DTI). A higher DTI can make it harder to qualify for a mortgage. Whether you receive or pay, it is important to fully disclose those details to your lender and provide supporting documentation as necessary.
