My ex-wife is looking to purchase a new townhouse and we are trying to figure out if the Alimony I pay her qualifies as income when applying for a home loan? And related to that does child support qualify as income for the purposes of a home loan? She will have no other qualifying income for right now—will this adversely affect her in the loan process?
She will have plenty of equity from the sale of our house to put a large payment down–would this change how a bank will look at the loan? It would seem to me that a bank would be more likely to view an applicant who is willing to place a larger equity share at the beginning more favorably in terms of income. Is this true?
The answer is “maybe”. Alimony can be used as a source of income when applying for a mortgage. I’ve never seen a case where alimony was the sole source of income, so that’s where the “maybe” comes in. The lender will want to know such things as who the alimony is due from and under what arrangement (court order, written agreement, oral argreement, etc).
A larger down payment will certainly make the lender more willing to accept a higher risk. You don’t indicate how large a down payment, but 20% would be the beginning of “large”. Something in the 30-40% range should really get the lenders attention.
Alimony and child support may be considered additional income, but I doubt that a mortgage would be granted if they are the only source of income because they are both conditional. Alimony is usually conditioned upon remarriage, or may even have a time constraint and child custody can change, nullifying any support order.
I’d suggest calling a mortgage broker, and asking about this, unless one posts here.
A particular banker has access to a handful of loan programs, whereas a good mortgage broker has knowledge of dozens of lenders and loan programs, and can likely offer more specific advice than you’ll get here.