FHA Loans With Child Support Payments

FHA Loans With Child Support Payments Mortgage Guidelines

Gustan Cho Associates are mortgage brokers licensed in 48 states

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

Securing approval for FHA loans when dealing with child support payments may impact the borrower’s debt-to-income ratios. Conversely, individuals receiving child support payments have the opportunity to leverage this income as a qualifying factor. To be eligible, child support payments must be consistent over the next three years.

However, it’s essential to note that FHA loans with child support payments may not be suitable for borrowers who need to catch up on their court-ordered child support payments. Lenders often use the Debt Income Ratio to assess the eligibility of mortgage loan borrowers, which is calculated by dividing the borrower’s monthly gross income by their total debt.

Child Support Payments In Debt to Income Ratios

Raising children involves various expenses such as clothing, education, healthcare, extracurricular activities, and summer camps. Despite the manifold costs associated with childcare, lenders typically do not include them in the calculation of Debt-to-Income (DTI) ratios. Child-related expenses are generally excluded when evaluating a borrower’s ability to manage debt. It’s crucial to highlight, though, that FHA loans specifically consider child support payments in DTI calculations.

To qualify for a home loan, borrowers need to stay current on court-ordered child support payments, as these are considered monthly debt obligations in the DTI ratio computation. Unfortunately, a significant number of borrowers are unaware of this element, leading to a notable percentage of mortgage loan disqualifications attributed to issues related to FHA loans with child support payments. The financial impact of child support payments can be substantial, depending on the number of children involved. Speak With Our Loan Officer for Getting Mortgage Loans

How Child Support Affects High Debt Income Ratio Borrowers

Child support payments frequently represent a substantial component of a borrower’s monthly gross income, playing a crucial role in their financial profile. Mortgage lenders commonly apply stringent criteria to assess the debt-to-income ratio, a key factor in determining loan eligibility. According to the guidelines outlined in the HUD 4001 FHA Handbook, there are specific thresholds for both front-end and back-end debt-to-income ratios when seeking approval for a mortgage loan.

In the context of FHA loans with child support payments, the front-end debt-to-income ratio is restricted to 46.9%, while the back-end ratio is capped at 56.9%. These limitations highlight the significance of managing various financial obligations, including child support payments, to meet the specified criteria for mortgage approval.

Navigating child support payments can present a unique challenge for individuals aspiring to qualify for a mortgage loan. The intricacies involved in negotiating and managing these financial commitments require careful consideration and strategic planning to ensure compliance with lender requirements.

Considering the complexities of the mortgage approval process, borrowers must proactively address the impact of child support payments on their overall financial standing. By doing so, they can enhance their chances of meeting the FHA’s stringent debt-to-income ratio criteria.

In conclusion, FHA loans with child support payments underscores the need for borrowers to navigate the intricacies of their financial landscape diligently. Understanding and strategically managing these obligations are pivotal in meeting the specified debt-to-income ratios and securing approval for a mortgage loan. Contact Us For VA Or FHA Loans, Click Here

Solutions High DTI Due To Child Support

In the realm of mortgage loan solutions, individuals confronted with the financial challenge of high monthly child support payments can explore various strategies to navigate this obstacle. One effective option involves the pursuit of a non-occupying cosigner for the mortgage, providing a viable pathway for those with significant child support obligations.

This approach entails enlisting a family member as a co-signer, a practical and commonly employed strategy among parents seeking to support the mortgage loan borrower.

The act of requesting someone to cosign is indeed a substantial favor, but it remains a prevalent practice within the realm of mortgage borrowing. This collaborative effort between family members can significantly bolster the chances of meeting the requirements for a mortgage loan. The co-signer essentially vouches for the borrower’s creditworthiness, thereby mitigating the impact of high child support payments on the overall financial profile.

Alternatively, another avenue worthy of exploration involves securing a part-time job. It’s crucial to understand that mortgage lenders typically assess a 2-year history of part-time employment when considering the income derived from such work during the qualification process. By establishing a consistent part-time work history, borrowers can further strengthen their financial standing, thereby enhancing their eligibility and improving the likelihood of mortgage approval.

To overcome the financial hurdles associated with high child support payments while applying for a mortgage, a dual strategy can be employed. This involves securing a cosigner who doesn’t reside on the property and exploring part-time employment opportunities.

By enlisting the assistance of family members through cosigning and augmenting income with part-time work, borrowers can enhance their financial standing, thereby improving their chances of mortgage approval, despite the weight of child support responsibilities.

These approaches not only tackle immediate challenges but also contribute to the establishment of enduring financial stability in the context of mortgage borrowing. Utilizing familial support through cosigning and boosting income via part-time employment collectively strengthens one’s financial profile, creating a conducive environment for mortgage approval, even in the face of substantial child support obligations. In essence, these methods not only address the immediate concerns linked to child support but also pave the way for sustained financial well-being in the realm of mortgage borrowing.

Case Scenario On Debt To Income Ratio

In a given scenario, imagine a borrower with a monthly debt obligation of $1,000 and a monthly gross income of $4,000. Lenders calculate the debt-to-income ratio by dividing the monthly debt payment of $1,000 by the monthly gross income of $4,000, yielding a 25% debt-to-income ratio.

Mortgage loan applicants must recognize that when computing debt-to-income ratios, lenders consider FHA loans with child support payments as part of the monthly debt. This emphasizes the importance for borrowers to be mindful that proposed new housing payments are factored into the calculation of monthly debt, especially when dealing with FHA loans with child support payments.

Qualifying For FHA Loans With Child Support Payments

FHA Loans With Child Support Payments

For individuals with substantial monthly child support obligations, I recommend exploring consultation options or connecting with a lender that doesn’t impose additional requirements on debt-to-income ratios. Mortgage Brokers can tap into a network of numerous lenders offering specialized mortgage loan programs designed for borrowers managing elevated debt-to-income ratios. It’s noteworthy that FHA loans accommodate a maximum front-end ratio of 46.9% and a back-end ratio of 56.9%, aligning with guidelines on debt to income.

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 800-900-8569 or text us for a faster response. Or email us at alex@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays. Speak With Our Loan Officer for Getting Mortgage Loans

FAQs about FHA Loans With Child Support Payments Mortgage Guidelines

  • How do FHA loans consider child support payments in the debt-to-income ratio? FHA loans include child support payments when calculating the debt-to-income (DTI) ratio. Child support payments are part of the borrower’s monthly debt obligations, impacting both the front-end and back-end ratios used to assess loan eligibility.
  • What are the thresholds for debt-to-income ratios in FHA loans with child support payments? The Federal Housing Administration (FHA) sets specific limits on debt-to-income ratios for FHA loans. The front-end ratio, which considers housing-related expenses, is capped at 46.9%, and the back-end ratio, which includes all monthly debt, is limited to 56.9%.
  • How can individuals with high child support payments overcome financial challenges when applying for a mortgage? Individuals facing high child support obligations can explore options such as acquiring a non-occupying co-signer or securing a part-time job to improve their financial profile. These strategies can help meet lender requirements by offsetting the impact of child support on the borrower’s overall debt-to-income ratio.
  • Are there any additional options for individuals with substantial child support obligations? Yes, besides securing a co-signer or part-time job, borrowers can connect with mortgage brokers and have access to lenders offering specialized programs for high DTI situations. Some lenders may offer FHA loans with no overlays on debt-to-income ratios, accommodating borrowers with higher debt levels.
  • What is the significance of staying current on court-ordered child support payments? Staying current on child support payments is crucial for borrowers considering FHA loans because delinquent payments can lead to disqualification. FHA lenders view these payments as mandatory monthly debts, and failure to stay current can adversely affect the borrower’s ability to qualify for a mortgage.
  • How can borrowers enhance their chances of meeting FHA’s debt-to-income ratio criteria? Borrowers can improve their chances by meticulously managing their finances and ensuring they meet FHA guidelines for income and debt. This includes maintaining good credit, minimizing unnecessary debts, and strategically planning how to handle ongoing financial obligations such as child support.

This blog about FHA Loans With Child Support Payments Mortgage Guidelines was updated on January 10th, 2024.

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

  5. 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 ?

  6. 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. 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. 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.

  8. 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. 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. 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.


  10. 100% owner of LLC with title of 3 unit MFH in Philly; property is owned free and clear worth somewhere between 275 & 300, however I’m looking to cash-out. Currently unemployed, with indecent credit; not much liquid assets. Last year wasn’t a great year. As of this month, April, we have 2 of 3 leases; property has a positive cash flow of 525 a month.. The total income is 1625 a month & the expenses including maintenance, repairs, insurance, utilities and taxes total about 1100 a month. I’ve recently watched a lot of the great videos you provide through the forum about non-QM loans, however, I’m unsure if I am eligible for financing. Any guidance or advice would be appreciated. Thank you.

  11. I am in the market to purchase a home price up to a 2.4Million. I have a 20% down payment and have a co-borrower also. Both our credit scores are 700+ but need a lender who can finance us since we did a loan modification 3 years ago. Also, our DTI is low < 10%. Let me know if you can help. I am looking for a pre-approval to start shopping.

  12. I’m a independent contractor and would like further info on qualifying for a non QM mortgage loan.

  13. Hello
    My name is Gerri Cash, I live in Va. I have been trying for 3 yrs to refinance the home that was deeded to me when my father passed.
    Due to the fact I missed a payment over 2 yrs ago and have not been able to make that payment up, I am considered late every month with every payment made. Which will not allow me to refinance. After the passing of my father I struggled very hard to get back in the swing of things. I was his caregiver round the clock 24/7 so to say it was hard is an understatement.
    He was my best friend, my hero and my sound half…….until he wasn’t !!!! He was diagnosed with advanced dementia and a little over a year later he was gone.
    The current mortgage is in his name but I make the payments and the home is deeded to me!!!
    The home appraised at $315,000 and the mortgage balance is only $55,000. There has to been something I can do to obtain some of the equity that is in this home.
    I have been reading online different articles on how to get this done and come across an article about you!! Can u help me? If I can obtain $50,000 from the equity in the home and pay if the mortgage balance that pays off all of my debt and I finally get to start fresh.
    In my current situation I can’t help but think I should just sell the home and obtain all of the equity and walk away. Then I remember the promise I made my dad who had walking horses and his only wish was I take care of them and keep them on the property until they pass. I have gone with out to assure I keep that promise completely on my own!!! I can’t help but think there has to be a better way. I am sitting on so much equity and can’t access it? This money could turn my whole world that went into a tail spin into a breath of fresh air.
    What if any are my options?

  14. Hi, I am interesting to refinance my condo, I bought for cash, and second one want to refinance, my annual income for last year 130.000 with my wife, now I am unemployed, it’s possible to refinance for new apartment?

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