The fact that you make or receive alimony payments may play a role in determining whether you are approved for a mortgage in New Jersey. If you receive alimony payments, they may be counted as income if certain conditions are met. If you are the one making these payments, they may be considered a long-term debt obligation.
When do alimony payments count as income for mortgage purposes?
As a general rule, you’ll need to show that you have received alimony payments for several months prior to applying for a home loan. You’ll also need to show that these payments are likely to continue. Lenders will generally want to know that you’ll receive alimony for anywhere from one to three years after a loan application is approved. If there is a possibility that a family law judge might terminate payments in the near future, it could complicate your ability to get financing to buy a house.
How do alimony payments impact your ability to get a mortgage?
Lenders make home loan decisions based on a number of factors such as your income or debt-to-income ratio. As alimony payments are considered to be a debt, they will necessarily increase this figure. If your debt-to-income ratio is more than 50%, it may be difficult to get a mortgage of any kind. Of course, an obligation to pay alimony to a former spouse will only be considered if it is an ongoing one.
It’s important that you know where you’ll live after your marriage comes to an end. If you plan on buying a home, it’s likely in your best interest to structure a divorce settlement in a way that maximizes your ability to obtain approval for a mortgage.