Betty Almost Lost Her Little River Home Because Child Support Counted for Nothing
Betty almost lost the house she wanted near Little River, SC, because her child support counted for nothing on paper.
Betty is a fictional, illustrative single parent. She is not a real client, but her situation is one that comes up often. She receives child support under a court order, she wants to buy a home, and she plans to use that support as qualifying income on an FHA loan. Her assumption was simple: the court ordered it, so it counts.
What most people get wrong
Most people believe the court order is the proof. The order matters, but it only tells part of the story. A lender is not just asking whether support was ordered. A lender is asking whether it will keep coming and whether it has actually been arriving. Those are two separate questions, and the FHA guideline treats them separately.
The FHA rule, word for word
This is FHA guideline Section II.A.4.c.xii.B, which covers alimony, child support and maintenance income:
The Mortgagee must provide evidence that the claimed income will continue for at least three years. When using a final divorce decree, legal separation agreement or court order, the Mortgagee must obtain evidence of receipt using deposits on bank statements, canceled checks, or documentation from the child support agency for the most recent three months that supports the amount used in qualifying.
Breaking it into two proofs
The first proof is continuance. The income has to be shown to continue for at least three years. That is why your paperwork matters from the start, and why you should ask your lender exactly what they need to see to document it.
The second proof is receipt. When the support is documented by a final divorce decree, legal separation agreement or court order, the lender must also obtain evidence that you actually received the money over the most recent three months. The guideline names three acceptable kinds of evidence: deposits on bank statements, canceled checks, or documentation from the child support agency.
Then there is the last phrase, and it is easy to miss: the evidence must support the amount used in qualifying. If the amount your lender wants to count does not line up with what the documents show, you have a gap. So the figure on the paperwork and the figure used in the loan need to match.
How Betty fixed it
Betty stopped treating child support as something to mention at the end of the application. She treated it like a document package. Before applying, she gathered her final divorce decree, legal separation agreement or court order, whichever applied to her. Then she pulled together the most recent three months of proof of receipt. Because the support moved through the child support agency, agency documentation was one option. Bank statement deposits and canceled checks were others.
The result was a file with nothing left to guess about. The question was never whether Betty received support. It was whether she could prove it in the way the guideline describes.
The question to ask, and what to bring
If you receive child support, alimony or maintenance, here is the one thing you can do today. Ask your lender:
"For my child support income, what do you need to show it will continue for at least three years, and what do you need to show the most recent three months of receipt?"
Then bring:
- The final divorce decree, legal separation agreement or court order
- Bank statement deposits, canceled checks, or child support agency documentation for the most recent three months
- Records that match the amount to be used in qualifying
A lender who answers that question clearly is a lender who understands how this income is documented. A lender who hesitates is telling you something too.
Where I come in
I am Jason Sharon, a licensed mortgage broker. When a buyer comes to me with support income, my first job is to find the path: sort out which documents show continuance, which show receipt, and whether the numbers line up before the application ever moves. Every situation is different, and this article is general education, not a loan approval. But getting your paperwork in order early gives your file its best chance.
If you receive child support, alimony or maintenance and want to buy, call me at 843-LOW-RATE and I will walk you through it.
Home Loans Inc - Jason Sharon, Mortgage Broker. Company NMLS #1728740, Jason Sharon NMLS #1281448. Equal Housing Opportunity.
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