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Tips for Using Child Support to Qualify for a Mortgage

It’s not easy being a single parent. In fact, it can be quite challenging at times, especially if you’re used to having two incomes and a larger monthly budget. Sometimes it’s hard to make ends meet, and for some single parents, the idea of home ownership seems out of the question. We have some good news, though.

Child Support Payments May Count as Income

Child support payments can be added to your regular income from your job or other sources and be used to qualify for a mortgage. These payments boost your overall monthly income, which means you may be eligible for a bigger mortgage than you thought. And that means you can afford a larger or nicer home for yourself and your family. 

There are a couple of rules that have to be adhered to when using child support payments to qualify for a mortgage. Below are the primary conditions that have to be met in order for your child support checks to qualify as income on your mortgage application.

Six months of payments in the past.

You have to have received child support payments for a minimum of six months before the date on which you submit your mortgage loan application. This means you have to have received the full amount of child support regularly for the past six months. Sporadic payments don’t count, nor do payments that are less than the legally-decreed amount as determined by your divorce or separation agreement. You’ll need to be able to document receipt of these payments.

Helpful Hint: Each time you receive a child support payment, deposit the check as soon as possible and in full. Don’t keep cash out or deposit the check along with other checks. You’ll need to have a clean record of receipt of your child support payments, and the best way to do that is through your bank records and deposit slips. Don’t muddy the paper trail; deposit each check in full as soon as you receive it. It may also be helpful to make a copy of each check before you deposit it.

Some states are set up to help enforce the payment of child support. If your child support payments come to you through the state, you can use documentation from the state to show that the payments are being made on time and in full. In those cases, for example, the state of MO Child Support Enforcement has a link to document payment history of their cases, which is available here. Each recipient is required to obtain an 8 digit key code to access their account.

Three years of payments going forward.

You also have to be able to prove that you expect your child support payments to continue for an additional three years from the date you submit your mortgage application. Most child support payments continue until the child turns 18. So if you’re applying for a mortgage and you have a 16-year-old, you won’t be able to include child support payments because they’ll only continue for another two years.

If you have children of varying ages, you may be able to split your child support and use the portion that applies to the younger ones if the older ones are getting ready to “age out.” Consult with your mortgage loan officer to determine what’s allowed in your situation.

Helpful Hint: Documentation is essential when proving that your child support payments are anticipated for another three years. Make sure you know where all your paperwork is, and use one of the following to verify the expected continuation of child support payments for your mortgage loan officer:

  • A divorce or separation agreement that mandates the amount of your child support payments and the length of time they’re in effect.
  • A written decree, court order, or other document that outlines child support payment requirements.

Voluntary Child Support

While it’s not common, some ex-spouses do make voluntary child support over and above what’s mandated by the divorce decree. While this is good news for you and your children, voluntary payments are not allowed as income when applying for a mortgage. The simple reason for this is that they’re voluntary; they’re not mandated by a legal document. While they do help with monthly bills, they don’t fall under the rules noted above and don’t count as income for mortgage qualification.

A Note about Alimony Payments

Alimony payments – payments made to an ex-spouse to maintain a certain standard of living after divorce – are separate from child support payments, but also fall within the realm of income. As long as they meet the criteria noted above (having been received consistently and in full for the past six months and with the expectation that they’ll continue for another three years), they can be included as income when qualifying for a mortgage.

If, however, your alimony payments are in jeopardy – for instance, if your spouse has filed a request to reduce or discontinue them – your mortgage lender will not consider them as income for mortgage qualification.

We Are Here to Help

Homestead Financial Mortgage wants to help you get into the home of your dreams. For over ten years, we’ve been working with customers in St. Louis, MO; Overland Park, KS; and Godfrey and Glen Carbon, IL. We’d love to work with you, too. We’re licensed in eight states (Missouri, Kansas, Illinois, Tennessee, Indiana, Colorado, Florida, and Arkansas), and we can help you find a home that’s a perfect fit for your family’s needs.

If homeownership is a dream of yours, don’t let your single status hold you back. Talk to one of our expert mortgage loan officers to see if your child support payments can help you qualify for a mortgage. You might be surprised at the possibilities you uncover!

To learn more, please reach out!

Homeownership is the “Great American Dream”….it also happens to be one of life’s greatest stresses. However, if we pay attention to these simple 9 steps, we can maximize the “Dream” part while minimizing the “Stress” part of the process. Over the next series of articles, we will cover the necessary steps to buying a home.
Continue reading “Here to Home Ownership in Nine Steps Part Three”

Home ownership is the “Great American Dream” …it also happens to be one of life’s greatest stresses. However, if we pay attention to these simple 9 steps, we can maximize the “Dream” part while minimizing the “Stress” part of the process. Over the next series of articles, we will cover the necessary steps to buying a home.

This is part two of our three part series. Read part one here.
5. Making your mortgage application
Now that you have an accepted contract, it is important to quickly make your mortgage application. While you have gone to your licensed mortgage loan officer already for a pre-approval, you will now need to make application for your mortgage, if you have not already. Make sure to have your standard documentation ready. Continue reading “Here to Home Ownership in Nine Steps – Part Two”

Home ownership is the “Great American Dream” …it also happens to be one of life’s greatest stresses. However, if we pay attention to these simple 9 steps, we can maximize the “Dream” part while minimizing the “Stress” part of the process. Over the next series of articles, we will cover the necessary steps to buying a home. Continue reading “Here to Home Ownership in 9 Steps – Part One”

Good news. Your real estate agent just called with a buyer who would like to see your house. Trouble is, there’s only so much your real estate agent can do and it’s up to you to make your home as presentable and attractive as possible, with the goal of engaging the buyer emotionally. Here are some tips for showing your home. Continue reading “Tips for Showing Your Home to Buyers”

With spring just around the corner, you find yourself watching home improvement shows in the evening, dreaming of the different ways to spend your home equity line of credit. After all, you’ll recoup what you’ve spent when you sell your house. Right? Don’t kid yourself. While prices and returns on home improvements vary regionally, there are certain projects that should be avoided. Continue reading “The Worst Home Fixes for the Money”

Buying a home is an exciting prospect, but the idea of saving up enough money for a down payment is a little less appealing for many people. It’s often hard for first-time buyers or growing families to save up enough money to meet the down payment requirements for a conventional mortgage. However, there are loan options that don’t require a down payment, and for many, these mortgages can be lifesavers.

VA loans provide an avenue to homeownership for veterans or currently serving armed service members who may have trouble qualifying for a conventional mortgage.

VA Home Loans

VA loans are offered as a service of the Department of Veterans Affairs. They’re available for active service members, veterans, and eligible surviving spouses. The VA provides a home loan benefit – a government-backed promise of funding – designed to help military veterans and active service members buy a new home or refinance an existing one.

VA loans are administered by private lenders such as banks and mortgage companies. The Veterans Administration guarantees a portion of the loan, which allows the borrower to obtain more favorable terms on the loan in the form of lower interest rates and a zero down payment. VA loans have helped more than 24 million service members become homeowners since 1944.

Getting a VA Loan

The steps to obtaining a VA loan are similar to those for a conventional loan, but some of the requirements differ.

  1. Prequalification. A qualified VA lender (a local mortgage company or bank) will help you get prequalified for a VA loan. They’ll work with you to determine how much house you can afford based on your income, debt, entitlement, and other financial considerations. This process gives you the information you need to start looking at available houses.
  2. Preapproval. Preapproval is the next step toward getting a VA loan. During the preapproval process, you will be asked to produce paperwork that verifies monthly income, bank account balances, monthly obligations, and other financial information. This information is used to create a preapproval letter, which shows your real estate agent and home sellers that you’re a serious buyer who has the financial ability to purchase a home. This is an important step because in some cases, it can make the difference in getting the house or not. Sellers like to work with buyers who have the financial ability to move forward on a sale.
  3. Make the offer. Once you find the perfect home, it’s time to make an offer. Your real estate agent can help you determine a reasonable number for the home you’re looking at.
  4. The VA appraisal process. Once your offer is on the table, your lender will order a VA appraisal on the property. This has to be done for two reasons: to make sure the home appraises at fair market value and to make sure it meets the VA’s minimum property requirements (MPRs). These MPRs may include inspections of the mechanical systems, roof, crawl spaces, and a check for termites, mold, wood rot, and lead-based paint. A safe home is the ultimate priority.
  5. Close the deal. Once you’ve gone through the steps above, you’re ready to close the deal. You’ll meet with your mortgage lender to sign the closing documents – and you won’t have to worry about bringing a down payment.

More about VA Loans

VA loans are perfect for military personnel who want to take advantage of them. However, be aware that they’re only available for certain types of homes. If you’re planning on buying a working farm, you may be out of luck, but if you want to purchase a single-family home or condo that’s “move-in” ready, a VA loan is a good option. Also, while there’s no mortgage insurance required on a VA loan, there is a mandatory VA Funding Fee associated with them.

Homestead Financial Mortgage is Here for You

If you have questions about no-money-down mortgage loans – or any other type of mortgage – Homestead Financial Mortgage is here for you. Our experienced loan officers are happy to provide information and help you determine which type of mortgage will work best for your situation. The process may seem complicated at first, but our goal is to make it as simple as possible for you. 

Homestead Financial Mortgage has branches in St. Louis, MO, Overland Park, KS, and Godfrey and Glen Carbon, IL. We also serve the metro areas surrounding these cities. Give us a call today with your no-money-down mortgage questions. We look forward to working with you!

To learn more, please reach out!