How to use Child and Spousal Support to qualify for a Mortgage

Time for some straight talk.  Ending a marriage is never easy no matter what the circumstances.  I previously wrote a post on The Business of Divorce and for the sake of this advise it might be a good time review it.  If you are planning on owning a home once the dust settles there are a few things you need to know.

Once your final separation is in place you can now qualify for a mortgage without your spouse's consent.  If this sounds odd please go back and read my previous post.  When applying for your new mortgage on your own lenders will consider your Child and Spousal support as income.  Just exactly how they do it varies from lender to lender but not significantly.  Let me generalize. 

Child Support:  The first thing you will need in order to use Child support payments as income to qualify for a mortgage is your separation agreement.  Lenders need to know the support was agreed on by both parties and the amount was clearly defined in your agreement.  Only the child support is eligible.  Any agreement to pay other expenses is not considered.  Some lenders have an age limit on the children of 12.  Anything older than that they consider a risk because the support will stop long before the mortgage ends.  Another thing some lenders will ask for is confirmation of 3 months receipt of payment.  This can be verified with bank statements showing the funds going into your account over a three month period.  This may sound silly to most but trust me there is a very good reason for this.  Don't forget, lenders have seen a lot more situations then you will ever encounter.  It's really protection for you but that's another post.

Spousal Support:  This one is easy.  In most cases it's taxable income and much more easy to verify especially if you have been receiving it for a number or years.  Again you will need a copy of your separation agreement to confirm the support is a firm and binding legal agreement.  The agreement will also lay out any terms of the support such as length of time it will be paid etc.  If the support is new lenders will like to see a three month history of payment. 

It's easy to get your back up with a lender at this time in your life.  Try to remember that lenders are in the business of making "safe and sound" loans and they need to know you will be okay going forward.  Where things become difficult is when you're trying to do everything at the same time.  Separating, selling, buying, and dealing with the emotional fall out of up rooting lives and changing routines.  It's a lot of stress. 

Personally I think this a perfect time to work with someone you can trust.  In my practice we make a point of hand holding these transactions from start to finish.  We also tell it like it is.  We too want you to have a safe and secure life going forward. 

As always I welcome your comments, opinions, stories and any and all feedback.  Have a great day.