Buying a Home as a Single Parent After Divorce: What Actually Counts as Income
I meet a lot of parents who have decided they are renters now. The divorce took the house, the savings, and the second income, and they have quietly filed homeownership under someday.
Some of them are wrong about that, and I would like to be the one who tells them. I am a mortgage broker in Oregon City, and buying on one income is a large part of what I do.
What counts as income
Your job counts, obviously. Here is what else can.
Child support and spousal support. Lenders can count these if they meet two tests. You have been receiving it for a while, and it is set to continue for a while. The exact rules differ by loan program, which is why I do not quote months on a blog. What is always true is that it needs a paper trail. The decree or separation agreement spells it out, and the payments show up in your bank account. Cash handed over in a parking lot does not count, no matter how reliable it is.
A second job or side income. Usually needs a history and needs to look like it will continue.
Part-time, seasonal, or commission income. Countable with history and documentation.
If you are still negotiating your settlement, this is worth knowing now. How the support is written affects whether a lender can use it later.
What counts against you
Every joint account you are still on. The old mortgage, if your name is still on it. Car loans, cards, anything with both names. The decree assigning it to your ex does not remove it from your credit report. Some lenders will exclude a debt if you can show the other person has paid it from their own account for a long enough stretch, but do not count on that. Get the joint accounts closed or refinanced as part of the settlement.
The down payment
Programs exist with lower down payments than people expect. There are also state and local down payment assistance programs in Oregon, and some of them are built for first-time buyers, which, for lending purposes, often includes people who have not owned a home in the last few years. Your share of the equity from the old house, if there was any, can be the down payment on the new one.
I will not list dollar figures here because they change and because your situation is yours. On a call I will show you exactly what your down payment could look like and where it could come from.
Your credit after a divorce
Divorce does not show up on a credit report. Late payments by your former spouse on a joint account do. Pull your reports now, before you apply for anything. If there is damage, I will tell you what fixes it and how long that takes. Sometimes the answer is to buy now. Sometimes it is to clean up for six months and then buy. Either way you leave the call with a plan instead of a guess.
The realistic checklist
- Pull all three credit reports and list every joint account.
- Find your decree and read what it says about support and about the old house.
- Gather two years of tax returns, recent pay stubs, and bank statements.
- If you receive support, gather proof it is coming in.
- Message me. I will tell you what is possible on your own, and if it is not possible yet, exactly what gets you there.
Not legal advice
Talk with your attorney about your settlement. I will work with them on the mortgage side.
I serve Oregon City, Clackamas County, Multnomah County, Washington County and the rest of Oregon. Your next chapter has a front door. Let me show you where it is.
Becky Chambers, Mortgage Broker, NMLS #2814018. Freestone Mortgage, NMLS #2613454. Licensed in Oregon. Equal Housing Opportunity. For informational purposes only. This is not a commitment to lend. This is not legal advice. Program availability and terms vary.