Qualifying For a Mortgage with Child Support Income
If you are in a position which you will be receiving alimony or child support for at least 3 years after the date of a mortgage application, it may qualify as an income stream that the banks will take into consideration. There must be documentation that the alimony or child support will continue to be paid for at least 3 years; it can be verified by one of the following situations:
1. A certified copy of a divorce decree, property settlement agreement or separation agreement (if divorce is not final) that indicates payment of child support or alimony and states the amount of the award and the period of time over which it will be received.
a. NOTE: If there is no documentation that specifies alimony or child support, lenders usually will not consider any proposed or voluntary payments as income.
2. Any other type of written legal agreement or court order describing payment terms for alimony and/or child support.
3. Documentation that verifies any applicable state law that mandates alimony, child support, or separate maintenance payment, that must specify the conditions under which the payments must be paid.
a. Check for limitations on the continuance of the payments, such as age of the children for whom the support is being paid or the duration over which alimony is required to be paid.
4. Document the borrower’s regular receipt of the full payment, as verified by:
a. deposit slips;
b. court records; and
c. copies of signed federal income tax returns that were filed with the IRS, or copies of the borrower’s bank statement showing the regular deposit of those funds.
The Bank then will review the payment history to determine it suitability as stable qualifying income.
To be considered stable income then full, regular, and timely payments must have been received for six (6) MONTHS or longer. Income received less than six (6) months is considered unstable and may not be used to qualify the borrower for the mortgage.
In addition, if full or partial payments are made on an inconsistent or sporadic basis, the income is not acceptable for the purpose of qualifying the borrower.