FHA Child Support Income Requirements
If you are applying for an FHA loan and you are receiving child support, you can use those payments as income to help with your FHA loan approval.
The FHA guidelines will allow child support income to be used if those payments will continue for the next three years.
FHA Child Support Income
Child support is income that is received from an ex-spouse, partner or non-custodial parent to help support the dependent child of the borrower.
Qualifying child support is supported by a divorce decree or a court order and is treated as income from a lending perspective. If you happen to the the one making the child support payments, then it is treated as a monthly liability.
For the child support to count as income, you must be receiving it for least 3 months and there must be a 3 year continuance. Child support payments can be used up until the child’s age of 18. The exception is the state of Kentucky where child support can be received for children up through the age of 19.
If the payments are voluntary and not ordered by a divorce decree or court order, there must be a 12 month history of receiving the child support payments.
If the child support payment is variable, it will be up to the discretion of the underwriter to determine how much can be used on the application.
Although the details above outline the FHA guidelines for child support income, if the divorce decree indicates payments should extend beyond the age of 18, the lender must accept those terms as they would override the FHA Loan Requirements.
Child Support Income Grossed Up
When the lender calculates your child support income, they may gross it up to 115% if it is not taxed. For example, if your child support payment is $100 per month, the lender may use $115 as income on your FHA loan application.
FHA Child Support Documentation
When applying for an FHA loan using child support income, the lender may ask for one or more of the following documented items:
- Fully executed copy of the divorce decree
- Documented receipt of prior child support payments
- Voluntary child support payments must be documented for the past 12 months
- Document indicating the payments will continue for the next 3 years
This documentation is just for child support income and is in addition to the other documents needed for an FHA loan.
How FHA Child Support Income is Calculated
The lender is going to look at the child support income received for the past three months to determine the effective income. If voluntary payments are made, the lender will look at the most recent 6 months to determine the effective income.
If there were missed payments or inconsistent payments over the past 6 months, the lender will use the average child support income received over the past two years to determine the effective income. If child support income has been in place for less than two years, then it will be averaged for whatever time the payments have been made.
FHA Child Support in Arears
The child support income can disqualify you if there are missed payments in the past three months. If you are making the payments and you are late or have missed payments, then you may be disqualified from applying for an FHA loan.
FHA Foster Care Income
FHA allows foster care income to be used to qualify for a mortgage. You will need to prove receipt of the foster care income for the past three months, and need to verify that it will continue for the next three years.
FHA Adoption Stipend Income
FHA guidelines also allows for adoption stipend income to be used to qualify for a mortgage. You will need to prove receipt of the foster care income for the past three months, and need to verify that it will continue for the next three years.
Conventional Child Support Income Requirements
For a conventional loan, Fannie Mae Guidelines are the same as FHA. You will need to prove the child support payments will continue for the next three years. As a result, there is no benefit from a child support income standpoint to go with an FHA or conventional loan. That decision should be made based upon the loan program itself, and how it will impact you financially.