Alimony is classed as reduction of income, but child support is calculated as a monthly debt obligation. These can and do affect your ability to qualify for your next mortgage loan.
Here are a few tips to help you.
Alimony is a reduction of income where child support is calculated as a monthly debt obligation like a car loan. So, a $5000 income with alimony of $1000 per month nets $4000 of income.
Where child support subtracts the $1000 from the debt to income percentage which is typically 45%. In this case $2250 – $1000 of child support giving only $1250 left per month to buy your new home assuming no other debts.
We don’t have to count child support or alimony when:
• Alimony or child support are voluntary.
• If the divorce will be finalized after closing.
• If there are 10 or fewer payments remaining prior to closing with Fannie Mae and Freddie Mac.
• If there are 9 payments or less with FHA or VA but if the debt is greater than 5% of the applicant’s income for FHA or 2% for VA then the payments must be counted.
• If you’re Past Due, it must be made current and or paid in full prior to or at closing. That includes related charge-offs and collections.