One important section of the rules for FHA loans states a borrower’s income must be verified by the lender as “effective income”. This means that the income must be stable and likely to continue.
Some types of income can’t be counted. A part-time business selling goods on eBay, for example, might not qualify. But what about other types of non-employment income like child support, alimony, or maintenance payments?
There are plenty of borrowers who receive or are eligible to start receiving these types of payments. Does the FHA recognize them as effective income?
In certain cases, yes. Alimony, maintenance payments as part of a divorce decree, and/or child support can qualify and be counted toward a borrower’s debt-to-income ratio provided the payments meet standards set by they FHA.
According to HUD4155.1, Alimony, Child Support and Maintenance Income Criteria, “Alimony, child support, or maintenance income may be considered effective, if