You’re in a sticky situation if you’re applying for a new home while simultaneously filing for a divorce. There are multiple implications of a divorce to begin with, such as damages to your credit and finances. Especially if you have a mortgage attached to your home with your soon to be ex-spouse.
These could be factors when you try to remove your spouse from your current mortgage and title, or if they can’t make payments on the mortgage anymore once they leave. It could be the other way around as well, you could be looking to buy a new home after you’ve left your old one.
It’s a no brainer that anytime your financial situation changes, your chances of getting VA-mortgage approved change along with it. If you lived in a two income home before your divorce, then you lose monthly income as well as subtracted spending power. Along with less income, it becomes tougher to meet the VA Home Loan Guaranty’s debt-to-income (DTI) guidelines and the VA residual income requirement.
On another side, if you start receiving alimony or child support, it can counteract a loss of income. You won’t be required to supply the information of your alimony or child support terms but, if you do then it can help you qualify for a new home loan. Lenders will mainly want to be sure that your payments are stable, reliable, and will continue for at least another 36 months.
There can be a large difference on your application approval if you’re the payee or payor of alimony and child support. It can help to reduce or increase your debt-to-income ratio. The VA Home Loan Guaranty program requires that all VA borrowers to maintain a stable debt-to-income ratio.