Buying a home is easily one of the biggest financial transactions most of us make in our lifetimes. Next to getting a divorce, there are very few purchases or decisions that we make as adults that can have such far reaching consequences.
As you can probably imagine, it’s not always easy to even qualify to purchase – or refinance – a home on your own. Though there used to be all sorts of sketchy things that lenders did to get people into homes, post the 2008 recession, there are a whole lot of rules that you need to follow in order to be approved for financing.
In general, one of the best things that you can do is talk to a mortgage lender early on in the process. A lender can give you an idea of whether you’d qualify to buy or refinance a home and what your credit limits might be. In some instances, they can even give you information that will help you clean up your finances enough to be able to qualify for a loan on a home.
Maybe you have a home in mind now. Maybe you don’t. Maybe you’re divorcing. Maybe you and your child’s father are just breaking up. Maybe you’ve rented all along, or maybe you’re hoping to refinance your current joint home into your sole name. No matter what your situation, if you’re hoping to use your child and/or spousal support to qualify for a loan on a home, you’ll want to make sure that your I’s are dotted and your t’s are crossed.
1. In general, you need to receive spousal support and/or your child support for at least three months before it can be considered as income for the purposes of obtaining a home loan.
There needs to be a pattern to the money. You need to have a court order or a separation agreement that specifies the amount that you’ll receive, and then you have to start receiving it.
2. The support that you receive should be clearly marked.
If your child’s father does a bank-to-bank transfer, just seeing the right amount transferred from another bank account to yours at the same time each month isn’t going to be enough. You may need to prove that the account from whence the money was transferred actually belongs to your ex or child’s father in order to prove its your support.
If you receive a check, that would probably work – but who sends checks in 2022? Not many people, I can tell you. Venmo would work, too.
3. You need to receive the right amount, in full, each month.
Do not allow him to ‘offset’ his child support based off of other expenses. If he’s supposed to pay $1,000 a month in support, your account should show that you’re receiving $1,000 a month in support. It’s not going to be enough to say, ‘Oh, well, he paid for the kid’s soccer stuff last month, so I let him knock off $200.’ If he makes an expenditure like that, have him pay the child support in full at the right time in the usual manner, and then pay him back $200.
Is it a needless amount of transfers? Yup. Is that what underwriters need to see? Also yup.
4. You’ll need to receive support for AT LEAST three months, but some underwriters will go even further back into your payment history to make sure you can repay the loan.
Yeah, it’s not just that you’ll need to mind your p’s and q’s for the three months leading up to your home purchase or refinance; in some cases, you’ll need to show back 6-12 months! It’s really going to depend on your case and whether you’d qualify independently of the support money you’re receiving, but the further you can go back with consistency, the better.
5. If the child that you’re receiving support for is 15 or older, your child support may not be able to be counted!
To qualify as income for home buying or refinancing purposes, you’ll need to receive support for three years. So, your agreement and/or court order would need to apply to a child who is younger than 15, or specify that support will continue for a period of more than three years. In Virginia, parents are not required to pay child support for children after the age of 19 or high school graduation, so this would be a pretty significant (not to mention highly unusual) deviation. If you find yourself in this position, you may need to qualify for financing without the benefit of your child support.
A home purchase is a really big deal, and, before a lender can just fork over the money, he or she needs to make sure that you’re good for it. A strong credit score and a solid payment history can help, but when you’re introducing the new variable of child and/or spousal support that you’ll be receiving as a result of your separation, divorce, or break up, you’ll also want to make sure that your accounts reflect your finances accurately. It’s not necessarily intuitive for people outside of the mortgage world, but that doesn’t matter – you’ll be held to those standards all the same.
Follow these guidelines, and you’ll have a much better chance of having your support used to help qualify you for the purchase of your dream home.
For more information, or to schedule an appointment to discuss your case one on one with a licensed Virginia divorce lawyer, give our office a call at 757-425-5200.