North Carolinian’s marry and divorce at slightly higher rates than people in most other states, according to a 2009 Census report by the U.S. Census Bureau. If you are facing a divorce, remember that in NC, even if you owned a house in your previous marriage, there are first time home buyer programs available.
These mortgage loans are available to folks who have previously been married and are now single parents. To qualify for Single Parent Mortgage Loans in NC you needto understand the Documentation and Allowed Income underwriters look at.
If you are a Veteran who is considering a “Separation or Divorce,” and you will be paying or receiving Alimony or Child Support, qualifying for a VA Loan for your next home could be fairly easy… or… if you don’t document it just right, you could be facing some frustrations! The same thing holds true if you are applying for a Single Parent home loan with FHA or USDA Home Loan… documentation is CRITICAL.
DOCUMENTATION: Qualify for Single Parent Mortgage Loans
The first step in documenting income from alimony, child support, or maintenance payments as a legitimate source of income for a FHA Loan, is providing proof that such payments are happening on a regular basis. Many couples who enter divorce proceedings agree to informal child support arrangements or alimony payments; unfortunately Underwriters do not generally recognize “Informal” arrangements as a legitimate source of income.
Many Investors now require a court order or other legal documentation showing that one party is legally obliged to pay the other party, before any of the Child Support, Alimony or Separate Maintenance income can be included to qualify you for a mortgage. A divorce decree, formal separation or court order is sufficient in most cases – along with copies of CANCELLED checks.
This is where many people run into trouble when applying for a single parent mortgage loan program. If you receive $120 a week for child support, and you only deposit $100 one week (keeping $20 in cash) or you held the deposit a few days and added another check WITH the $120 a few weeks later.. your bank statement shows a deposit of $160 – 4 days LATE… the Underwriter is going to want more documentation. When possible, it’s always best to deposit your alimony and child support checks the DAY you receive them, and for the FULL amount.
Amount and Types of Income Allowed to Qualify for Single Parent Mortgage Loans
When you apply for an FHA mortgage and list alimony or child support payments as legitimate income, we must determine the ratio of your other income versus the amount of child support or alimony you receive. Depending on the Investor we are selling your loan to, certain mortgage requirements govern how that income is to be considered.
For example, some lenders stipulate if alimony or child support is 30% of the household income or less, the following standards apply:
- The party paying alimony or child support must be obligated in writing to pay.
- The payer must have paid for at least half a year before the loan application is filled out.
- The payer must be obligated to continue paying for a minimum of three years after closing the sale.
- There must be evidence of “stable receipt” of the full amount of alimony or child support for the most current six months prior to applying for the FHA home loan. For a USDA Home Loan, the requirement is for 12 full months of documented income.
When the amount of alimony or child support is greater than 30% of the FHA borrower’s income, the rules can change. Some lenders require the following;
- The borrower must receive alimony or child support for a full year before applying for the loan.
- The payer must be obligated to continue paying for three years after the loan has closed.
- There must be evidence of complete, on-time payments for a full year before applying for the home loan.
Job gaps will also be treated differently depending on the Investor. Let’s say you were a stay at home mom for the last 7 years. With the divorce, you are now back in the work force, doing pretty much what you did before – we might be okay without a full 2 years of “new” work history. It’s going to depend on what kind of work you are doing.
For instance, if you were a “professional” prior to staying home… a nurse, a paralegal and you’ve kept your certifications, and you are working regular hours… we can probably use your income. If you are working part time as a waitress – we’re probably not going to be able to use that income.
Let’s say you stayed at home, but you’ve been teaching piano and voice lessons for the last 5 years. If you are teaching piano lessons, and you didn’t claim that income on your tax returns – it will not be counted as stable income.
In general, a gap in employment will require you to be back on the job for a suitable amount of time. For example, if you’re out of work for six months, you may need to be back on the job for six months before a lender will move forward.
Again, every employment scenario has its own wrinkles and detail, especially if you are trying to qualify for Single Parent Mortgage Loans. Call Steve and Eleanor Thorne about about employment to qualify for a mortgage, and your particular situation at 919 649 5058. Remember – you might qualify for a Single Parent Grant to purchase a home in NC!