MORTGAGE FAQS #2: Can I Use Support to Qualify for a Mortgage?

Common Mortgage Myths & Their Impact with Divorce

by Bill Cook

MORTGAGE FAQ #2: Can I use Child or Spousal Support to Qualify for a Mortgage?  

In this series entitled, WHAT ABOUT THE MARITAL HOME MORTGAGE?, Bill Cook dispels common myths.

Myth #2: 

You are always able to use the court ordered spousal or child support received per your divorce decree for purposes of qualifying for a mortgage loan immediately after a divorce is finalized as long as it is in writing and finalized by the judge.

Reality #2:

Income used for most mortgage qualification purposes usually requires evidence that it has been received in the past and a strong likelihood that it will be received in the future.  For mortgage lending qualification purposes, most lenders will have the following requirements:

1.       Borrower must state that they want the income to be used.

2.       The income requirement must be in writing per the divorced decree and not something that is just verbally agreed upon. 

3.       The income as required must have at least a 6-month history of being received and documented. If the 6 months documented receipt of income originated from a written separation agreement prior to the final divorce decree, then many lenders will accept that as being applied towards the requirement of a 6-month documented history of receipt.

4.       There must be a minimum of 36 months of income still to be received per the agreement after the proposed new mortgage loan is closed.  Unfortunately, a spousal or child support that has less than 42 months total receipt will not qualify because it does not allow for the require 6 months of previous receipt of income payment on time and PLUS a minimum of 36 months of income remaining.

RECOMMENDATION:

It is highly recommended that a mortgage professional be brought into the divorce process to assist in providing an education to the parties of the requirement and also identify or possibly pre-approve one or both of the parties on options of refinancing the current marital home or possibly qualifying for a new home. 

Many thanks for this first article in a series of four on mortgage matters from by Bill Cook!

PLEASE NOTE: The view and recommendations expressed in this article are those of the author and do not necessarily represent the views of Banfield Couling Law & Mediation, PLLC or its staff.  This blog is not intended to constitute legal, financial or tax advice.  We do not recommend making important decisions of the type addressed in this article without specific legal or professional financial advice in advance.  We at Banfield Couling Law and Mediation PLLC are here to help navigate your legal matter at any stage of your divorce.