Can Alimony Help You Qualify For A Mortgage?

Constant legal procedures, sudden lifestyle changes, and a plethora of decisions are challenges often associated with legal separations/divorces. It may be difficult for divorcees to obtain financial stability in some instances. Many wonder how post-separation arrangements will affect their real estate purchasing options (particularly when seeking mortgage qualification). 

Although many variables affect the likelihood of qualifying for a mortgage, it is important to note that the evaluating authority will evaluate the alimony-receiving and alimony-paying parties differently.

Applying for a mortgage while receiving alimony payments

First, demonstrating proof of received alimony payments can serve as an advantage when applying for a mortgage. This proof indicates that alimony payments received are considered income (under specific circumstances). 

As explained by SFGate’s Karina Hernandez, “lenders typically ask for proof that you have received on-time alimony payments for at least the last 6- or 12-month period, depending on the loan type.” Providing proof of alimony payments can allow divorcees to have a higher demonstrated income, thus improving their chances of qualifying for a mortgage. 

Applying for a mortgage while making alimony payments

Alimony payments can be a double-edged sword. Those responsible for making these payments may be put at a disadvantage. In this scenario, payments are considered debt in the eyes of the lender. When reviewing applications, lenders compare applicants’ income to outstanding debt to better understand their ability to make payments in the future. On the other hand, it is important to note that this is not the only factor considered. As stated by Rocket Mortgage: “Your lender also looks at your credit score and the amount of money you have for a down payment.” 

Key Takeaways

Those who have gone through legal separation/divorce must understand the impact on home-purchasing opportunities. This will improve their financial stability. Keeping records will allow people to prove alimony payments received when applying for a mortgage. Paying alimony may not help you qualify for a mortgage, but staying organized will help you understand your overall financial situation.

While adjusting to a new lifestyle after a legal separation can be difficult, understanding how it will affect one’s chances of qualifying for a loan is the first step towards a new beginning.

Need help navigating the strange world of alimony and everything it entails? We can help. Reach out to us at Miod & Company today!