Child Support Income Can Be Grossed Up

Did you know that when it comes to mortgage applications, child support income can be grossed up? This means that lenders can increase the amount of child support income considered for qualifying purposes.

Fannie Mae and Freddie Mac

For borrowers applying for a mortgage through Fannie Mae or Freddie Mac, child support income can be grossed up by 125%. This means that lenders can increase the reported child support income by 25% to account for its non-taxable status. By grossing up the income, borrowers may qualify for a higher loan amount, making homeownership more accessible.

FHA

The Federal Housing Administration (FHA) also allows for the grossing up of child support income, but at a slightly lower rate of 115%. This means that lenders can increase the reported child support income by 15% to account for its non-taxable status. This provision by FHA provides flexibility for borrowers who rely on child support income to meet the necessary income requirements.

Benefits of Grossing Up Child Support Income

Grossing up child support income can have several benefits for borrowers. Firstly, it allows for a more accurate representation of the borrower’s actual income, considering the non-taxable nature of child support payments. This can help borrowers qualify for a higher loan amount and potentially secure more favorable loan terms.

Additionally, grossing up child support income can be particularly advantageous for borrowers who rely heavily on child support payments as their primary source of income. By increasing the reported income, lenders can better assess the borrower’s ability to repay the mortgage, increasing their chances of loan approval.

Child support income can be grossed up by lenders, allowing borrowers to qualify for higher loan amounts and potentially secure more favorable loan terms. Fannie Mae and Freddie Mac allow for a gross-up rate of 125%, while FHA allows for a rate of 115%. This provision benefits borrowers who rely on child support income as their primary source of income. If you are considering applying for a mortgage and receiving child support income, be sure to discuss the grossing-up option with our loan consultants to maximize your borrowing potential.