Why timing matters
Until your divorce is settled, it can be hard to show a lender what you'll earn, what you'll owe and what you'll own. Your spouse may still have a claim to marital funds, and your share of the current home may not be decided yet.
Buying is often simpler once you have a final decree or a signed agreement that spells out support, debts and who keeps what. Some buyers can move forward earlier with a signed agreement. Your loan consultant can tell you what your loan program needs.
Income from support
Alimony or child support you receive can often count as income when it's documented. Lenders commonly want to see the court order or agreement, proof that payments have been received, and enough time left on the payments to show they'll continue. The exact rules depend on the loan program.
Support you pay
If you pay alimony or child support, that payment counts as a monthly debt. It raises your debt-to-income ratio, which can lower the amount you qualify for. Plan your budget with that payment included.
Your current home and joint debts
If your name is on the mortgage for your current home, that payment usually counts against you until the loan is paid off or refinanced, even if your spouse is keeping the home. In some cases, a lender may leave it out if the agreement assigns it to your spouse and other conditions are met. Ask your loan consultant before you assume it won't count.
Joint credit cards and car loans work the same way. Until they're closed, paid or refinanced, they can still show on your credit and in your debts.
Your down payment
Lenders need to see where your down payment comes from. If it's coming from a settlement, a buyout of your share of the home or a split of savings, the agreement and a clear paper trail help. Funds that are still being divided may not be usable yet.
Steps to prepare
- Get copies of your decree or signed agreement, and any court orders on support
- Pull your credit reports and check joint accounts
- Keep records of support payments sent or received
- Avoid opening new credit while things are settling
- Get pre-approved so you know your budget on one income
