Alimony & Mortgage

Alimony counts as income when applying for a mortgage.

Alimony can affect a mortgage application, depending on whether you are paying or receiving alimony. Alimony may be considered income if you are the recipient, while it may be considered debt if you are the payer. It can also affect how you report deductions on your tax return.

Alimony as Income

Alimony payments may be considered income when applying for a mortgage. You will have to produce a court order mandating alimony payments, according to Interest.com. Proof of completed payments may also be necessary. If you are paying alimony to another person, lenders deduct this amount from total income before determining how large a mortgage you may receive. If you are receiving alimony lenders usually add the amount to your total income when determining your mortgage amount.

Taxation

If your mortgage payments on a joint-owned home qualify as alimony, you can deduct one half of the total payments from your federal taxes. Half of the mortgage interest on qualified homes can be deducted if you itemize on your tax return, according to IRS Publication 17. Your spouse must report one half of payments as alimony received and can also deduct one half of the mortgage interest.

Mortgage Qualification

Alimony is usually reported as debt when applying for a mortgage. Although this could affect ability to qualify for a loan, it is only a portion of what is considered by lenders. The ratio of your debt to income is the most important factor when underwriting a loan, according to Credit Info Center.

References

• Interest.com: Child Support and Alimony Count as Income
• Internal Revenue Service: Publication 17 (2009), Your Federal Income Tax
• Credit Info Center: Underwriting Guidelines for the Average Mortgage