Court ordered child support payments have a direct impact on your VA loan eligibility. If you are delinquent on your payments, you will have to bring yourself current in order to qualify for the loan. In addition, the current court ordered payments will become a part of your calculated debt-to-income ratio.
Getting Current on your Debt
The first step if you want to secure a VA loan is to bring your child support current. Most lenders will not allow a VA loan to go through without bringing this debt up to date. There are a few options for you to do this:
- Pay the past due amount in full and provide the lender with proof of the payment and that you are all caught up. The proof needs to be official, such as a document from the court showing that you are paid in full.
- Proving that you have a payment plan to make up for the child support that is in arrears. If you have a plan put together, you can provide that document as well as the proof that you have been making those payments on time.
Bringing your delinquent child support current is of utmost priority when you want to secure a VA loan because the government does not look at this lightly. If you know you are behind before you apply for a mortgage, you should try to find a way to work out a payment plan so that you can get ahead of the problem and avoid delays in your mortgage processing.
Using the Child Support Payments in the DTI
Once you are current on your child support payments, you need to figure out how the standard payments will affect your debt ratio. Luckily, the VA does not put a lot of emphasis on the DTI; in fact they allow a generous 41% ratio. However, this does not mean that they will not look at it so you need to figure out your strategy to afford the loan.
In addition to the DTI, the VA puts a lot of emphasis on the amount of disposable income you have each month. This is the amount of your money that is left after you pay things that report on your credit report, such as:
- Mortgage (including taxes and insurance)
- Credit card bills
- Car payments
- Student loans
The VA will also include your estimated utility payments as the standard payments for the area, along with your child support payments.
For example, let’s say you live in the West and have a family of 5 and your net income between yourself and your spouse (who is on the loan) equals $4,300. From that $4,300 the VA will subtract:
- Potential mortgage payment with everything included $1,500
- Credit card payments (minimum required) $60
- Utility payments $250
- Child support $800
In this case, the disposable income would equal $1,690. Since the required minimum for disposable income in the West for a family of 5 is $1,158, you would pass the disposable income test.
The long and short of it is that you can qualify for a VA loan with delinquent child support payments as long as you have a plan. You cannot assume that you will be able to hide the fact that your payments are late, even if your wages are not garnished. The judgment will come out eventually, so it is best to be straightforward with your lender and to figure out a way to bring them current. Once your payments are current, as long as they fit within your debt ratio and leave you with enough money at the end of the month, you should be able to qualify for a VA loan.