Child support you receive counts as qualifying income on FHA, Conventional, VA and USDA loans, and because it isn't taxed, it often stretches further than the same amount of paycheck. The lender needs a court order or written agreement that sets the amount, proof the payments are arriving, and enough time left on the order for the support to last into the loan. With those in place, a single parent earning a modest wage can qualify for a lot more house.
What each program asks for
| Program | Proof of payments | How long it must continue | Gross-up |
|---|---|---|---|
| FHA | Most recent 3 months (12 months for a voluntary agreement) | Through the first 3 years of the loan | 15% |
| Conventional (Fannie Mae) | Most recent 6 months of full, regular, timely payments | At least 3 years from the application | 25% |
| VA | Length and regularity of payments are weighed | Likely to keep being paid consistently | Based on current tax tables, debt ratio only |
| USDA | 6 months if court-ordered, 1 year if voluntary | At least 3 years into the loan | Up to 25% |
FHA wants the final divorce decree, separation agreement, court order or voluntary payment agreement, plus bank deposits, canceled checks or the child support agency's records showing the payments. VA weighs whether the payments come under a written agreement or court decree, how long you've received them, how regular they've been, whether they can be enforced, and the paying parent's credit.
The three-year rule is where children's ages matter. The lender reads the order's end date, which is usually tied to a child's 18th birthday or high school graduation. If an older child's support stops within three years, only the amount that keeps going for three years counts.
Why the gross-up matters
Taxes come out of your paycheck but not out of child support, so lenders raise untaxed income to put it on equal terms with wages. That adjustment is called a gross-up. FHA adds 15%. Fannie Mae adds 25% on Conventional, or more when a wage earner in your tax bracket would pay more than that. On $700 a month, that's $805 on FHA and $875 on Conventional.
USDA lets the lender add up to 25%. VA has the lender estimate the tax you'd otherwise owe from current tax tables, and the grossed-up figure is used for the debt ratio only. VA's residual income test, the money left over each month after the house payment and bills, uses the support you actually receive.
A worked example
Tanya earns $3,600 a month at a medical office and receives $700 a month in court-ordered child support for her two kids, ages 7 and 10. The ex has paid on time through the state child support system for two years. Her car payment and credit cards total $250 a month. Here's FHA at a 5.75% rate, with property tax of 0.95% a year and homeowners insurance of $283 a month:
| Wages only | Support counted at face value | Support grossed up 15% | |
|---|---|---|---|
| Qualifying income | $3,600.00 | $4,300.00 | $4,405.00 |
| Highest FHA price | $201,000 | $248,000 | $256,000 |
At $256,000 her house payment is $2,065.79: principal and interest of $1,466.89 on a loan of $251,363.20 (which includes the 1.75% upfront mortgage insurance premium), $202.67 in property tax, $283.00 in insurance and $113.23 in monthly mortgage insurance. That's 46.9% of $4,405, right at FHA's 46.9% housing limit, and her total debt ratio is 52.6%, under the 56.9% limit. Counting the child support adds $55,000 to her price, and the gross-up alone is worth $8,000 of it.
Both kids are well under 15, so the support runs far past the three-year mark.
If your child support doesn't count yet
- Get it in writing. An informal arrangement is the hardest kind to use. A court order sets the amount and gives the lender something to verify.
- Build the payment record. If payments just started, FHA can count them after three months of documented receipt, and Conventional after six.
- Route payments through the agency. A payment history from the child support agency is cleaner proof than scattered cash deposits.
- Add a co-signer. A parent's income is added to yours on FHA and Conventional loans while you build the record.
- Use FHA 100% financing. It covers the 3.5% down payment with a down payment assistance second, from a 580 credit score, so cash isn't what holds you back.
Put your wages and your support into the QualRate calculator with the 15% gross-up added, and it shows your price on every program. Single parents qualify with child support all the time at AAA Capital Funding, and one call to 888-601-8344 tells you exactly which documents to gather.