It can be crucial when securing a mortgage when different types of income are evaluated. One such income type is child support, which is viewed differently by Conventional and FHA loan programs.
Conventional Loans: Fannie Mae and Freddie Mac
For Conventional loans, there are specific requirements for using child support as qualifying income:
1. History of Receipt: A minimum of 6 months of consistent receipt of child support payments is required. This history helps demonstrate the reliability of the income source.
2. Documentation: Borrowers must provide documentation of the child support terms, typically through a court order or legal agreement. Additionally, evidence that the payments are for the same amount each month is necessary. Without this documentation, the income cannot be used for qualification purposes.
FHA Loans: More Flexible Requirements
FHA loans offer a bit more flexibility when it comes to child support income
1. With a Court Order: If a court order outlines the terms of the child support and proof of consistent payments is provided, only 3 months of payment history is needed. This is a significant advantage for those who have recently started receiving child support.
2. Without a Court Order:
- If the payments are consistent in amount each month, a 6-month receipt history is required.
- If the payments vary in amount, a 2-year average of the income, or however long the payments have been received, is necessary. This approach allows for a more comprehensive view of the income over time.
Understanding these differences can help borrowers better prepare their documentation and set realistic expectations when applying for a mortgage. Knowing how child support income is evaluated can make the process smoother and more efficient whether you’re considering a Conventional or FHA loan. We’re here to guide you. Contact us for more information about using child support to qualify for a mortgage.
