Mortgage Facts - Did You Know

Alimony Debt Ratio Calculations

Alimony debt can be subtracted from income whereas child support counts as a debt

When the borrower is required to pay alimony, child support, or maintenance payments under a divorce decree, separation agreement, or any other written legal agreement – and those payments must continue to be made for more than 10 months – the payments may be considered as part of the borrower’s recurring monthly debt obligations.

However, for Alimony obligations only, the lender has the option to reduce the qualifying income by the amount of the alimony obligation in lieu of including it as a monthly payment.

Understanding this rule could help more borrowers paying alimony qualify with tight debt ratio’s.