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How does child support affect mortgage qualification?

Q:Can child support be included as a debt when trying to get a mortgage?

If you pay child support…

A: The new Ability to Repay (ATR) rules which took effect on January 10, 2014 most definitely states that any child support obligations are indeed treated as debts. This is true of all required contractual obligations and includes alimony as well, and if there is a court decree for a mandated amount, this amount would be included in the calculation.

However, if the child support (or other support) is voluntary between parties and no formal contractual obligation exists, it isn't likely to be treated as a debt since payment isn't a documented compulsory expense, but the lender may be obligated to consider it if it is disclosed.

If you collect child support…

This is also true if you hope to count such support as income on an application. For any source of funds to be considered income, you'll need documentation which shows that it is a regular recurrence. If you can show regular, separate deposits of funds, copies of cancelled checks or similar documentation, the lender may consider it; however, if these inbound funds are voluntary, the lender may not consider them, since they could stop at any time without warning.

Documentation matters most

In such cases, only a documented agreement between the sending and receiving parties would make them eligible to be used as income, and even if an agreement is secured, there may need to have been an established payment history for a period of time before the mortgage application is placed and a commitment for a given forward period of time as well.

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  1. CC April 05, 2018 5:22 am

    To add to this discriminatory practice, which I've also pointed out to lenders, you also pay income taxes on the child support. It's the exact opposite of an HSA account-- why can't there be a child support version of this so at least it could be pre-tax income (if your kids can't eat or have a roof, no health right?)? Like many of us, we may be paying taxes on 20% of our income that goes straight to child support. I wonder how many people honestly even note this given the way it affects loans. Just one more hidden way that (mostly) men get screwed in divorce cases regardless of the party at fault.

  2. Frank July 11, 2016 3:42 am

    I agree with you 100%. The rule is stupid. They do not count the amount of children you have to support against your debt to income while you are married even though there is expense involved with raising them. Now basically you are theoretically paying that same amount to raise them to someone else (your ex)to raise them so why count it against you now? Seems discriminatory to me.

  3. Ron Simmons June 01, 2016 5:16 pm

    Is the law (ATR) likely to ever be modified or overturned? If a parent paying support to the former spouse has the income, credit score, clear debt ratio otherwise, it is unfair to punish the owner of said support payments while rewarding the receiver of them (ex-wife) who can turn around and use that payment as income reported.My husband has earned 95-120k for the past several years working as a medical administrator. He has a credit score near 800 (or did so las time we tried for a loan), has never defaulted on his child support of nearly $2,000 a month, car payments, mortgage, and even paid alimony during some of that time. But when he went to apply for a mortgage, all he could qualify for was a $30,000 loan - nothing close to purchasing a home. He could qualify for a car more expensive than that with only a 6 year loan. The child support is the only debt keeping us from purchasing something together. Meanwhile, his ex was able to use the money that is supposed to be for the kids and count it as supplemental income. She was able to qualify for a refinance and keep their old home, valued at $360,000 incidentally. The situation is beyond frustrating.The system does not seem equitable to both parties. With the kids only 10 and 7 now, we will not be able to qualify and purchase a home again for another 11 years. Is there any hope for change to the system that currently keeps divorced dads house-poor even when earning a combined household income of $150,000? Any help you can provide would be appreciated.

    1. Ken May 11, 2017 10:21 am

      Im going through this now. Tried to get a mortgage for $40 more a month than Im paying in rent, but was denied because of child support payments.

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