Alimony and Child Support Lending Guideline Changes
Alimony and Child Support payments will now be deducted from Income in debt ratio calculations, and will result in a lower debt ratio for borrowers. Previously, you had to deduct the payment from the total monthly debt obligations
Debt Ratios are used in determining whether a borrower can qualify for a mortgage. The two calculations are housing expense divided by gross income, and the total debt including other monthly debt payments divided by gross income. The housing debt is considered the front ratio and the total debt is considered the back ratio. This new change will allow clients more borrowing power by deducting it from the front ratio.
If you have clients that did not qualify prior because their debt ratios were too high, please have them contact me. With the new change in effect they may now be able to qualify.
Please contact me if you have any questions.
