Qualified income per dollar is important when applying for a mortgage. Many borrowers don’t realize that child support income can be aggregated, which means we can increase its value when calculating your debt income (DTI) ratio. As child support is considered non-tax income, Fannie Mae, Freddie Mac and FHA allow lenders to adjust it to reflect their true purchasing power.
Traditional loans (Fanli Mae and Freddie Mae MAC)
For traditional loans backed by Fannie Mae or Freddie Mac, child support income can be increased by 125%. This adjustment helps borrowers get higher loan amounts by increasing their DTI ratio.
FHA Loan
FHA loans also allow earning income from child support, but at a slightly lower speed, at 115%. This can still have a significant impact on mortgage approvals, especially for borrowers on the edge of the qualifying race.
Aggregating non-tax income like child support allows us to illustrate the fact that taxes do not reduce this money. By increasing its value in the underwriting process, the borrower may be eligible for a larger mortgage or better loan terms.
If you receive child support and consider making a purchase, make sure you have the lending factor in this adjustment. We help borrowers maximize their eligible income; contact us to explore your options!
