FHA Loans With Child Support Payments Mortgage Guidelines

This Article Is About FHA Loans With Child Support Payments Mortgage Guidelines

Qualifying for FHA Loans With Child Support Payments can affect the borrower’s debt to income ratios:

  • On the flip side, Borrowers who are receiving child support payments can use it as qualified income
  • In order to use it as qualified income, child support payments need to continue for the next three years
  • FHA Loans With Child Support Payments is not good if borrowers are delinquent on their court-ordered child support payments
  • Debt To Income Ratio is the amount of debt a mortgage loan borrower as compared to the monthly gross income

In this article, we will discuss and cover FHA Loans With Child Support Payments Mortgage Guidelines.

Case Scenario On Debt To Income Ratio

Case Scenario On Debt To Income Ratio

For example, let’s take a case scenario where a borrower has total monthly debt payments of $1,000:

  • We will say that this borrower has a monthly gross income is $4,000
  • The debt to income ratio by lenders is calculated by dividing the monthly debt payment of $1,000 by the monthly gross income of $4,000
  • This yields a 25% debt to income ratio
  • The proposed new housing payment is also calculated as monthly debt

Mortgage loan borrowers need to realize that child support payments will be calculated as monthly debt when lenders calculate debt-to-income ratios.

Child Support Payments In Debt to Income Ratios

Child Support Payments In Debt to Income Ratios

There are a lot of expenses in raising children. Clothing, education, health care, extracurricular activities, summer camps, and many other expenses. However, expenses associated with children are not calculated by lenders when calculating DTI.

  • Lenders do not take those expenses into account when calculating debt to income ratios
  • However, child support payments are taken into consideration when calculating debt to income ratios
  • Borrowers with court-ordered child support payments need to be current in order to qualify for a home loan
  • Child Support Payments are taken into account as monthly debt obligations in calculating debt to income ratios
  • Many borrowers do not realize this and a large percentage of mortgage loan borrowers get disqualified for mortgage approval due to child support payments

Child support payments are not cheap depending on the number of children.

How Child Support Affect High Debt To Income Ratio Borrowers

How Child Support Affect High Debt To Income Ratio Borrowers

Child support payments can be a large percentage of the borrower’s monthly gross income.

  • Most mortgage lenders have overlays on debt to income ratio
  • The maximum allowed by HUD 4001. FHA Handbook on debt to income ratio is 46.9% front end DTI and 56.9% back end DTI when qualifying for a mortgage loan

Child support payments can definitely be a hurdle for a mortgage loan borrower in qualifying for a mortgage loan.

Solutions High DTI Due To Child Support

Solutions High DTI Due To Child Support

There are some solutions for mortgage loan borrowers who have high monthly child support payments.

  • One option is to get a non-occupied cosigner on the mortgage
  • Many parents who have high child support payments have a family member to cosign for them in order to qualify for a mortgage loan
  • Asking someone to cosign for them is a major big favor to ask but I have seen a lot of parents of the mortgage loan borrower cosign for them
  • Other options include getting a part-time job

However, a mortgage lender will only take a 2-year history of part-time employment in order for the part-time income to be used in qualifying for the mortgage loan.

Qualifying For FHA Loans With Child Support Payments

Qualifying For FHA Loans With Child Support Payments

For borrowers who have large monthly child support payments, I suggest they seek the consultation or a lender with no overlays on debt to income ratios.

  • Mortgage Brokers has access to dozens of lenders who have special mortgage loan programs for borrowers with high debt to income ratios
  • FHA Guidelines on debt to income ratio allow max 46.9% front end and 56.9% back end
  • However, most FHA Lenders have overlays on DTI and cap it at 45% to 50% DTI
  • Gustan Cho Associates has no overlays on debt to income ratio and will go as high as 56.9%
  • Borrowers who are receiving child support payments can use it as qualified income

Mortgage Borrowers have high debt to income ratios and need to qualify for an FHA Loan with no overlays on DTI, please contact us at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com.

18 Comments
  1. James says

    I have applied for an FHA loan. I need the child support to make my DTI work. My son turns 18 during his senior year. The loan person says that since his Birthday is in August and is 16 now we can’t get 3 years. The state of TN has child support continue till he is out of high school. Does FHA allow child support to be counted if he is still in school?

    1. Gustan Cho, NMLS 873293 says

      If you have documentation that the child support will continue for the next three years, you are in good shape. It needs to be a court document and/or some other official paperwork that state the child will get child support past 18 years of age. We are licensed in Tennessee. We are very creative in working debt to income ratios out. If you need help, please call and/or text us at 262-716-8151 or email us at gcho@loancabin.com. Thank you.

  2. John says

    I guess i just dont understand why its considered debt. I have been working post bankruptcy for four years to get my credit score up to 620 because i was told that was the only thing i needed for my VA loan. After four years i get it to 651 and now im being denied by the VA because my child support puts my DTI too high. Heres what i dont understand though in Illinois child support is taken out of my check before taxes and before i receive it so while it is technically a debt its not actually coming out of your earnings if if my net pay for the year is 88k my child support isnt a factor in that number because it is removed prior to even getting it. Too me it seems more like my employer is actually paying the debt and im working X ammount of hours for free to pay it back if that makes sense. I have 14 years of child support left im not waiting that long too buy a house please help there has to be away around this at 88k a year i have a hard time beliving i cant afford a 125k mortgage . Is there anything i can do. Thank you.

    1. Gustan Cho, NMLS 873293 says

      Absolutely. There is no debt to income ratio requirements on VA loans. We are lenders with no lender overlays so we can help you. Please call us at 262-716-81515 or text us for a faster response. Or email us at gcho@gustancho.com. Looking forward to working with you and your family.

  3. Rebecca says

    What are the FHA guidelines for past due child support payments? One large box lender has told us that you can’t past due payments for the last 24 months. I’ve read elsewhere that it is 12 months. Can you please clarify?

    1. Gustan Cho, NMLS 873293 says

      As long as you have a written payment agreement and are paying it timely, you are fine. In general, there is no seasoning requirements but if you have been timely for the past 12 months, you are all set. If you need a lender with no lender overlays, please call and/or text us at 262-716-8151 or email us at gcho@gustancho.com.

  4. Trish says

    At what point does child support payments no longer get factored into the debt to income ratio? If we have only two years left of paying child support, is this factored in the debt to income ratios?

    1. Gustan Cho, NMLS 873293 says

      Child support payment is factored in debt to income ratios until paperwork and documents show you are no longer liable.

  5. William says

    I have a court order to pay child support, but they don’t take it out of my paycheck I personally drop the money to the office . Do I have to the lender know that I pay child support ?

    1. Gustan Cho, NMLS 873293 says

      Proof of payment may be required through canceled checks and/or bank statements.

  6. William says

    How can the mortgage lender know if u pay child-support. How can they fine out ? If is not on ur paychecks oh credit ?

    1. Gustan Cho, NMLS 873293 says

      Child support is a public record so it will be recovered and asked. Unpaid child support will get recovered through public records when we do a national third party public records search

  7. Monica says

    What stage in the loan process is that 3rd party search done? In the beginning, or end, if they never said anything, as of yet. My clients file is in underwriting process now.

    1. Gustan Cho, NMLS 873293 says

      Normally during the initial underwriting process.

  8. Carlos says

    What if I have 12 months left to pay for child support as my child be be 18 soon. What is the threshold for lenders to include this as a debt since it will be over in less than a year.

    1. Gustan Cho, NMLS 873293 says

      If the payment is nine payments or less, we may be able to request it be exempt from your debt to income ratio. Please reach out to us at gcho@gustancho.cho. Or call us at 262-716-8151 or text us for a faster response. What state are you in?

  9. Alondra says

    Im currently in a chapter 13 and need to refinance

  10. Robert says

    It looks like you’ve misspelled the word “atleast” on your website. I thought you would like to know :). Silly mistakes can ruin your site’s credibility. I’ve used a tool called SpellScan.com in the past to keep mistakes off of my website.

    -Robert

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