Alimony and child support can count, but only under the right conditions.

When applying for a mortgage, every source of income matters, especially for borrowers who rely on alimony or child support. Here was want to clarify, and help define exactly what lenders look for to ensure this income is stable, consistent, and likely to continue.

What Makes Alimony or Child Support Eligible?

To be counted toward qualifying income for a mortgage, alimony or child support must meet three key criteria:

• It must be required by a legal agreement, such as a divorce decree or court order.
• It must have been received consistently for at least six months.
• It must be likely to continue for at least three more years.

This means that newly awarded support, or payments that are irregular or undocumented, cannot be used to help qualify, regardless of what the court order says, until a stable track record is established.

Documentation Requirements

Lenders need to verify both the obligation to pay and the history of receipt. Acceptable documentation includes:

• A divorce decree, legal separation agreement, or court order that details the payment terms.
• Proof of payment through bank statements, canceled checks, or deposit records for the most recent six months.
• Evidence that the payments are expected to continue for at least three years after the mortgage closing.

This documentation helps lenders determine that the income is not just available, but dependable over the life of the loan.

Understanding Continuance and Consistency

The clarification emphasizes that timing matters. If, for example, a borrower’s child is turning 18 within the next two years and child support ends at that time, the income won’t count, regardless of how regularly it’s been received. Mortgage guidelines require the income to be projected to continue for at least three more years.

For fluctuating payments, perhaps due to shared custody arrangements, lenders may average the payments over time, but consistency is still key. Sporadic payments or recent resumption of support may delay the ability to use this income in mortgage qualification.

Grossing Up Non-Taxable Income

If the alimony or child support is non-taxable, borrowers may be allowed to “gross up” the income. This means adjusting the income figure upward to account for the fact that the borrower doesn’t pay taxes on it, essentially making it comparable to taxable income when calculating debt-to-income (DTI) ratios.

To qualify for this gross-up, borrowers must document that the income is indeed non-taxable, typically using tax returns or IRS verification.

The Bottom Line

Alimony and child support remain valid income sources for mortgage qualification, but only when they are legally documented, received regularly for six months, and expected to continue for at least three more years.