The number 1 question I get about using alimony and/or child support income to qualify for a home mortgage is what if you have not been receiving alimony for 12 months? Well, good news, many people do not have to wait that long. For these situations, I recommend pre-approval in advance of looking for a home. Our automated underwriting engines (DU or LP) will determine the length of time this type of income needs to be received for the loan approval. It is common for a divorcee to want to use alimony/child support income to purchase a home immediately after a divorce.
Below are the guidelines as to how to document this income:
Document that alimony or child support will continue to be paid for at least three years after the date of the mortgage application, as verified by one of the following:
• A copy of a divorce decree or separation agreement (if the divorce is not final) that indicates payment of alimony or child support and states the amount of the award and the period of time over which it will be received. A copy of the children’s birth certificates may be required. Note: If a borrower who is separated does not have a separation agreement that specifies alimony or child support payments, the lender should not consider any proposed or voluntary payments as income.
• Any other type of written legal agreement or court decree describing the payment terms for the alimony or child support.
• Documentation that verifies any applicable state law that mandates alimony, child support, or separate maintenance payments, which must specify the conditions under which the payments must be made.
Document the borrower’s regular receipt of the full payment, as verified by:
• deposit slips,
• court records,
• copies of signed federal income tax returns that were filed with the IRS, or
• Copies of the borrower’s bank statements showing the regular deposit of these funds.
Review the payment history to determine its suitability as stable qualifying income. Each individual’s situation with the ex-spouse is different so it will be important to check with the lender you choose how to work it out. If you have further questions or comments, please contact me at Ingrid.firstname.lastname@example.org or visit me at http://www.cobaltmortgage.com/ingridquinn.