Other Sources of Income for Qualifying

Verification of other “sources of income” is often critical to obtaining a mortgage. Other sources of income, such as child support and alimony, can be used to qualify for a mortgage. However, you must be able to document that the payments will continue for at least two years in most cases, and then you must be able to prove that payments are being received regularly.

In the case of child support a divorce decree will normally identify the children for whom the payments are being received, how much is to be paid, and for how long. Most divorce decrees identify the children and their birthdates along with an age or time through which the payments will be made. This should be at least two years if you need the payments in order to qualify.

In the case of alimony, the same principles apply. The decree should identify when payments are to start, the amount of the payments, and when they will stop. Once again, to be used as income for qualifying, the payments should have at least two years remaining. Lump sum alimony isn’t normally counted as recurring income even though alimony is treated as income for the tax period received; if it is a lump sum payment it is not regular income that can be used for qualifying unless it will be received at regular intervals in the future, such as annual installments.

Fannie Mae and Freddie Mac normally require proof that the party obligated to make the payments does in fact have the means and intentions to pay. This is verified with documentation that shows the actual receipt of the funds for the most recent three months. Cancelled checks or bank statements for the last three months showing the actual deposits will suffice. It is crucial that you deposit the actual amount indicated on the divorce decree at regular intervals to prove that the funds are regularly available for use to pay your obligations. I recommend that you make copies of the actually check before you deposit it and keep these copies with your deposit receipt and actual bank statements together in a safe place. If these payments are made through the courts or a government agency, a printout showing the actual payments can be used for income verification.