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How does alimony factor into obtaining a mortgage?

Whether you are keeping the family home and renegotiating the mortgage to put it solely in your name or you are shopping for a new home, your income will be a determining factor in your interest rate and whether you can get a mortgage at all.

If you are receiving alimony, you already know that it is considered income for tax purposes. It may also be considered income when applying for a loan — as long as certain qualifications are met.

First, you need to show proof that you’ve been receiving alimony for a minimum of six months and that you are scheduled to continue receiving it for at least another three years. Further, it’s important that your ex be paying you consistently. If his or her payment record is spotty, a lender may not consider your alimony as part of your income at all.

Child support isn’t considered income by the Internal Revenue Service, lenders may still ask to see how much you’re receiving and factor that into their decision. While you may feel like it’s an invasion of privacy to share your divorce documents with a bank or other lender, it’s essential to remember that anything that impacts your current and future financial situation can be fair game when you’re seeking a loan — particularly one as large as most mortgages.

For people ordered to pay alimony, lenders will also want documentation of how much and for how long you are paying it. A person’s debt-to-income ratio is an important consideration when deciding whether to approve a loan.

If you’re planning to refinance or get a new mortgage after your divorce, you may want to discuss your plans with your Washington family law attorney. He or she will work to help you seek a settlement that will let you pursue your post-divorce goals.

Source: Quicken Loans, “How Alimony and Prenuptial Agreements Affect Mortgages,” Dawn Jamison, accessed April 13, 2017