Child support frequently factors into Veterans’ VA loan applications. While the topic can be complex, it typically comes down to income and liability verification to determine what you can afford.
VA loan lenders are often able to count child support payments as a verifiable income source, which can help Veterans increase their price range when purchasing a home. On the other side of the coin, monthly child support payments paid out by borrowers must be counted as an outgoing liability, which can have the opposite effect.
The VA loan rules that cover these topics are found in VA Pamphlet 26-7 of the VA Lender's Handbook. The rules specify the types of income defined by the Department of Veterans Affairs as “verifiable income,” which can be listed to get a VA loan.
Counting Child Support as Income
Assuming the child support received is stable and reliable, lenders are typically able to count it along with other sources of income. Any verifiable source of income has the potential to help improve your debt-to-income ratio for a VA loan.
However, VA lenders may have a few additional requirements before signing off on child support as income:
- A “seasoning” period may be required, meaning your lender will want to see that you’ve been receiving payments consistently for a few months to a year.
- There should be no indication that your payments received will stop in the near future.
- It’s possible that your lender will only count payments received as a part of a court order.
Child support policies and requirements vary by lender, so talk to your lender if you want to count your child support payments as income toward VA loan preapproval. Keep in mind that you are not required to divulge any child support payments received unless you want it counted as income.
Counting Child Support as a Liability
As you can imagine, paying child support can make getting a VA loan more difficult by lowering your debt-to-income ratio. In fact, you’re required by the VA to divulge any child support payments to your lender.
This doesn’t mean you won’t be able to get a VA loan though, even after a divorce, but your lender will request documentation of this liability during the mortgage process.
Any recurring monthly payments you make will factor into your ability to meet VA residual income guidelines as well. Residual income requirements vary by location and family size, but generally the VA wants borrowers to have some amount of discretionary income leftover each month.
Is my spouse's child support income eligible for a VA loan?
Yes, your spouse's income can be used for your VA loan application, as long as they are contractually obligated on the loan.
In cases where the spouse is not obligated on the VA loan, the laws of the state may determine whether or not the spouse's income may be counted. These "community property laws" are based on the shared financial obligations the married couple has.
If the borrower resides in a community property state, spouse income may be counted. If the borrower does not reside in a community property state, chances are that the only way spouse income might be counted is by having the spouse obligated on the new loan.
When in Doubt, Lower the Amount
If there’s any concern that child support payments will negatively impact your VA loan approval, consider lowering the amount you’re looking to borrow. Remember that the top VA loan lenders are used to working with child support and alimony payments, so don’t hesitate to let your loan team know if you have any questions along the way.