Overview
Alimony and child support create two separate DTI considerations: amounts you pay (which increase your debt obligations) and amounts you receive (which can increase qualifying income). The rules differ, and documentation requirements are specific. Understanding both sides prevents surprises during mortgage underwriting.
Alimony and child support in DTI calculations
| Item | Treatment in DTI | Required Documentation | Notes |
|---|---|---|---|
| Alimony paid | Added to monthly debt obligations | Divorce decree or separation agreement | Reduces housing budget dollar-for-dollar |
| Child support paid | Added to monthly debt obligations | Court order showing monthly amount | Reduces housing budget |
| Alimony received | Can be counted as income (if 3+ years remaining) | Divorce decree; 12 months bank statements | Must have 3+ years left to count |
| Child support received | Can be counted as income (if 3+ years remaining) | Court order; proof of receipt | Must be consistently received |
| Voluntary support payments | May or may not be counted | Documentation of history | Inconsistent lender treatment |
For alimony or child support to count as qualifying income, lenders typically require that payments will continue for at least 3 years from the date of the mortgage application. A support agreement ending in 2 years would not count as qualifying income even if it has been received consistently.
Key Points
- Alimony paid must be included in monthly obligations -- even if it is a large percentage of income
- Received support with 3+ years remaining and consistent payment history qualifies as income
- Court-ordered amounts are used -- not what is actually being paid if different
- Newly-awarded support that has not yet been paid typically cannot be counted as income
- Tax treatment of alimony has changed -- verify current IRS treatment with a tax professional
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Alimony and Child Support in DTI Calculations
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