Alimony And Child Support - if you are RECEIVING it

Alimony, which is sometimes referred to in court documents as spousal support or a spousal maintenance, is a payment from one spouse to another that usually lasts for a specific number of months or years.   All of this will be detailed in the divorce decree or legal separation agreement.  Many factors go into determining the final amount of alimony, such as the  number of years of marriage and/or household income, but this amount can be used as qualifying income for a mortgage.

Child Support

Child support is a court-ordered payment that a parent pays to another parent following a divorce. The parent who has primary custody of the child is usually the one who receives child support payments, though joint custody can complicate this arrangement. Child support is usually paid out until the child turns 18 years old. It’s possible to receive both alimony and child support payments simultaneously if your ex-spouse is a legal parent of your child.

Mortgage Guidelines

Generally speaking, both Alimony and Child Support work under the same underwriting guidelines.  Though there can be slight variations in the rules, here are the three most common qualifications in order to count either as income for your mortgage:

1. Three-Year Minimum – Alimony and/or child support income must continue for a minimum of three years after the date of the mortgage closing. This is typically documented within the divorce decree and/or separation agreement. 
2. Regular Payments – The borrower must document six months of regular and timely receipt of this income prior to closing their mortgage loan. If payments are irregular or have not been received for six months, they typically cannot qualify as income.  Some times the lender will use the income with only three months of receipt.
3. Finalized Terms – Proposed or voluntary payments prior to the divorce being finalized cannot be considered as income unless specified in a legal separation agreement. 

Documentation 

For documentation, it comes down to showing two elements of the income:  Receipt and Continuance.   

1. Receipt of Payments - For receipt, consecutive bank statements to show the monthly receipt will suffice.   Usually, this needs to cover the prior six months, but in some cases it can be three months.   Another option to show receipt is a print-out from the courts or court website account.   Keep in mind, the payments must be consistent.  
2. Three-Year Continuance - A copy of the filed divorce decree or fully executed separation agreement is usually all that is needed.  With both child support and alimony this documentation must show a three-year continuance of payments after the closing of your mortgage loan.