Can child support income be used to qualify for a USDA loan?

Can child support income be used to qualify for a USDA loan?. USDA Rural Development Home Loans Explained

Can child support income be used to qualify for a USDA loan? video duration 2 Minute(s) 38 Second(s), published by Metroplex Mortgage Services on 12 07 2019 - 18:41:39.

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Can child support income be used to qualify for a USDA loan?

When can child support income be used to help qualify for a USDA loan?

In today’s video I am going to share with you the details on how child support income can be used to help you qualify for a USDA loan.

Now, before we get started, don’t forget to take advantage and download our USDA Blueprint for Success with this link below.

This free guide is designed to walk you through the process step-by-step and is a great tool for both homebuyers and Realtors alike.

As a starting point, court ordered debts such as child support can either be considered a liability or a positive source of income that may be used towards USDA loan qualifying.

When child support is owed by a loan applicant, USDA guidelines state:
“Applicants obligated to pay child support, alimony, garnishments, or other court ordered debts must have the payment included in the debt ratio.”

It is important to remember, whether child support is deducted from your pay check or paid directly to an individual, the monthly amount must be included as a debt which will be documented by items such as a child support court order or divorce decree.

However, when received as income, court ordered child support may be used towards USDA loan qualifying when the applicant has:
• At least a 6 month history of receiving the income;
• The child support receipt has been consistent; and
• It will continue for at least 3 years past the date of loan closing.

Additionally, voluntary child support may also be used for qualifying, but will be subject to additional requirements.

Key points to remember when attempting to use child support income to qualify for a USDA loan:
• When the minimum history has been met, but the payment amounts are not consistent, the child support must be averaged over the time it has been received;
• Payments received for 6 months or less with zero received for any month must use zero;
• Also, and very importantly, if the child support is tax exempt, it may be increased by up to 25% for qualifying purposes. This is commonly referred to as “grossing up” nontaxable income which results in your qualifying amount being increased.

For example: if someone receives $500 in child support that is not taxable, after grossing it up, we can use $625 towards their USDA loan qualifying.

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