I'm a divorced dad paying child support. How will my payments affect my ability to get a mortgage?
Child support payments do not directly impact your ability to get a mortgage; instead, it all depends on whether your income qualifies you for one, our experts say.
When a lender is considering you for a loan, one of the most important factors is your debt-to-income ratio. They want to see how much of your income is needed for paying off your debts, which can include student loans, car loans, and credit card debt. Child support payments are also considered debt.
"When a parent is paying child support or alimony, it has to be factored into the debt service calculation," explains Douglas MacDonald, senior managing director at First Republic Bank. "So in essence, it counts as an expense, and therefore an offset to income. It is not detrimental to one’s ability to get a mortgage, so long as the overall income minus expenses still fits within the acceptable DTI guidelines."
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Part of the process of getting a mortgage is sharing your monthly income and expenses, so expect a lender to go over this with you.
"When a lender is looking to qualify you for your purchase and you are required to pay monthly child support, a lender will need to consider this as a monthly expense in your qualifications," says Brittney Baldwin, vice president and loan officer of National Cooperative Bank (a Brick Underground sponsor). "Lenders may ask you to supply a copy of your agreement to show how long you will be required to continue to make these monthly payments to count towards your recurring monthly debts."
To qualify for a mortgage, a borrower can have a debt-to-income ratio of up to 43 percent, although naturally, a lower DTI is helpful in expediting the process and helping you have access to a wider pool of lenders. If your child support payments put you over the 43 percent limit, then they can indeed hinder your ability to get a mortgage.
Trouble at home? Get your NYC apartment-dweller questions answered by an expert! Send us your questions at [email protected] A previous version of this post was published in February 2019.]
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