The Quick Read: FHA fits borrowers whose credit is bruised or whose debt load is heavy, and who can show child support will keep arriving. Conventional fits borrowers with stronger credit and lighter debt, especially when they want to avoid FHA’s annual mortgage insurance premium. Both programs can count child support. Both want it documented, actually received, and likely to continue, and neither can make you list it.
Key Takeaways
- Disclosing child support is your choice, and a conventional lender counts it only when you ask for it to be considered. Either way, the support must pass three tests: documented, received, continuing.
- FHA cash-out reaches 80% of the home’s value, starts at a 580 decision score, and carries mortgage insurance.
- Conventional cash-out usually asks for stronger credit and a tighter debt-to-income ratio, but its insurance picture is simpler.
- An order that ends soon can knock the income out of the file, no matter how much your household relies on it.
- Support you pay counts against you as a debt on both loans.
Side-by-Side
Here is how the two programs line up on the points that matter most for a borrower leaning on child support. Every figure for Lendmire’s FHA cash-out refinance program is subject to lender guidelines and full file review. Conventional terms vary more from lender to lender, so read that column as typical, not fixed.
FHA cash-out estimate
Seeded with an example value, a balance to match, and a round cash request; change any field.
Editable benchmark: 7.18% as of November 5, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not an FHA cash-out refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $193,000 current balance, the FHA cap on a principal residence with the upfront premium financed, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
An illustration, not a Loan Estimate, an approval, a quote, or a commitment to lend. The rate shown is the weekly Freddie Mac thirty-year conventional benchmark, used as a market reference; an FHA cash-out is priced by the lender at lock, and this is not an FHA cash-out refinance quote. HUD’s cap limits the base loan; the upfront premium is financed on top of the capped base loan; the monthly premium for the first year follows the snapshot’s schedule. Cash available means the base loan the cap permits less the balances retired, before closing costs, which this calculator leaves out. The line figure applies the line program’s combined loan-to-value ceiling to the same value and balance. Taxes and insurance are estimates you can edit. Licensed in sixteen states for consumer mortgages.
| Factor | FHA Cash-Out | Conventional Cash-Out |
|---|---|---|
| Maximum leverage | 80% of home value | Set by occupancy and unit count |
| Credit floor | 580 decision score and up | Often higher, set by the lender |
| Mortgage insurance | Upfront plus annual premium | Generally no monthly private mortgage insurance at 80% or below |
| Occupancy | Primary residence | Primary, second home, or other |
| Ratio flexibility | 31/43 base, up to 40/50 | Tighter, driven by automated findings |
| Waiting period | Own and occupy 12 months | Varies with the existing loan |
| Child support | Documented, received, continuing | Disclosed, documented, may be grossed up |
Notice what is missing: any row that crowns a winner. The better loan depends on your credit, your ratios, and how long the support will last.
How Each Program Looks at Child Support
Both programs treat child support as income only when the file proves three things. The money is documented by a court order, decree, or written agreement. It is actually received, shown through bank deposits, cancelled checks, or agency payment records. And it will keep coming. Miss any one and the income drops out of the calculation.
That is the shared backbone. The differences sit in the details.
On an FHA file
The older HUD 4155.1 handbook text on this income says the income may count if documentation supports the amount and shows it continues for at least three years. That is a legacy handbook, so treat the three-year idea as the benchmark and expect the lender to apply current HUD wording to your file.
Voluntary payments with no court order are harder. Expect the lender to want a written agreement and a longer deposit history. If you have received support for a short time, the lender may average the payments rather than use the latest one.
On a conventional file
Conventional lenders follow the Fannie Mae Selling Guide section on child support income. It lets a lender count the income only if you disclose it on the application and ask for it to be considered. It accepts a decree or other written legal agreement as support. It also says qualifying child support is nontaxable and may be grossed up.
Gross-up means the lender raises the counted amount to reflect that you pay no tax on it. That can help your debt-to-income ratio. Whether and how it applies on an FHA file is something to ask your loan officer directly.
What the FHA Program Looks Like for a Cash-Out Borrower
Here is the short version.
The loan reaches up to 80% of the home’s appraised value. You must have owned and lived in the home for 12 months before the case number is assigned. The wholesale programs we use start at a 580 decision score. HUD has a lower tier, but the network does not reach below 580.
Mortgage insurance has two parts. The upfront premium is 1.75% of the base loan and is typically financed into the balance. The annual premium runs between 0.15% and 0.75% of the balance, depending on term, loan amount, and LTV. LTV, or loan-to-value, is the loan balance divided by the home’s value. At 80% LTV on a thirty-year loan, the annual premium ends after eleven years. These are program facts, not an advertised price.
Ratios work like this: the base pair is 31/43 (housing costs over income, then total debts over income) with no compensating factors. Documented compensating factors, such as reserves or a strong payment history, can stretch it to 40/50 at the top tier. County loan limits apply and change each year.
A cash-out refinance replaces your existing mortgage. The whole balance gets new terms, not only the cash you pull out.
When FHA Is the Better Fit
FHA tends to win when your credit, your debt load, or both would hold back a conventional file. It also wins when child support is a meaningful share of income and the order has plenty of runway left.
Picture a homeowner with a 640 decision score, a few revolving balances, and a support order that runs for many more years. Conventional lenders may price or limit that file harder. FHA’s wider ratio room and lower credit floor give the support income a better chance of mattering. Child support is also often exactly the income that pushes a total debt ratio past a tight limit, and FHA’s documented compensating factors can absorb some of that.
Three conditions make FHA the stronger pick:
- Your credit sits in the range where conventional options narrow.
- Your debt ratio is the real obstacle, not your equity.
- Your support order clearly continues beyond the program’s continuance window.
The tradeoff is cost structure. FHA carries both an upfront premium and an annual premium. You pay for the flexibility, and you should weigh that across how long you expect to keep the loan.
When Conventional Is the Better Fit
Conventional tends to win when your credit is strong and your ratios are comfortable. It also wins when you want to avoid FHA’s premiums, or when the home is not a plain primary residence.
Say you have a solid score, modest other debts, and child support that qualifies for gross-up. Grossing up can lift the counted income and trim your debt-to-income ratio. Conventional cash-out at 80% or below generally stays clear of monthly private mortgage insurance. For a borrower who qualifies cleanly, that can make the ongoing carry simpler.
Occupancy also steers the choice. Fannie Mae’s published eligibility matrix sets different cash-out leverage for one-unit primary homes, two-to-four-unit properties, and second homes. FHA cash-out is a primary-residence product. If the home you live in has more than one unit, ask what each option allows.
Divorce adds one more conventional wrinkle. A conventional limited cash-out refinance can buy out a co-owner’s interest. If you take extra cash on top of the buyout, the loan becomes a standard cash-out. The classification changes the leverage, so tell your loan officer up front.
The Continuance Trap: When the Order Ends Too Soon
Walk through a timeline. Your youngest child turns 18 in two years, and the order ends then. Under older HUD handbook language, which may not match what a lender applies today, a program that wants at least three years of continuing income will leave that support out of your qualifying income. Lender guidelines set the current requirement, so ask your loan officer which period applies to your file. If a three-year period is applied, the money is real and the household budget depends on it, but the file still treats it as zero.
That does not end the conversation. Your options are to qualify without it, add other documented income, reduce other debts, or wait. A loan officer can run the file with and without the support to show where the line falls. Plan for the household too: if support drops off in a few years, a mortgage built on today’s budget will feel tighter later.
Other edge cases follow the same logic:
- Lump-sum equalization payments are not treated as a steady income source on a conventional file.
- Voluntary or informal payments need a written agreement and a longer deposit history.
- Short history often means the lender averages payments instead of using the most recent amount.
- Arrears or modified orders may change the amount the lender will count.
What If You Pay Child Support?
Support you pay is a debt on both programs. FHA treats it as a recurring obligation, and the federal ability-to-repay rules require lenders to consider it. The CFPB compliance guide for that rule treats payments the consumer must make as a debt-side item.
Expect your payment to go into the ratio alongside your car loan and credit cards. If it is a large piece of your budget, it may push you toward the program with the wider ratio room.
Which Fits You: Four Quick Scenarios
| Your situation | Likely leaning |
|---|---|
| Strong credit, light debts, support qualifies | Conventional |
| Lower credit, heavy debts, long order | FHA |
| Order ends within a couple of years | Either; likely qualify without it |
| Multi-unit home you live in | Compare caps on both |
These are tendencies, not predictions. Lender guidelines, appraisal value, and your full credit file decide the actual result.
Key Terms Defined
Continuance: the lender’s test that income will keep arriving, usually checked against the order’s end date.
Gross-up: raising a nontaxable income amount to reflect that no tax comes out of it.
Debt-to-income ratio (DTI): your monthly debts divided by your monthly gross income.
Seasoning: the waiting period between owning or occupying a home and refinancing it with cash out.
Before You Apply: What to Gather
Collect these in order:
1. The court order, decree, or written agreement.
2. Bank statements, cancelled checks, or agency records showing receipt.
3. Proof of the order’s end date and any modifications.
4. A list of debts, including support you pay.
Remember the disclosure choice is yours. If you do not list child support, the lender does not count it and cannot require you to. The CFPB has also studied what borrowers do with cash-out money. Its report on cash-out refinance borrowers found they often paid down credit card and auto debt, saw credit scores rise at first, and then saw card balances trend back toward earlier levels. Converting short-term debt into mortgage debt spreads it over a long term and uses your equity. Veterans have a third path, covered in Lendmire’s piece Best VA Cash-Out Refinance Program When Child Support Counts as Income.
The Verdict
Neither loan is the clear winner. FHA is the flexible option: lower credit floor, more ratio room, and a lender that will look hard at a long-running support order. You pay for that flexibility with mortgage insurance. Conventional is the cleaner option for borrowers who qualify comfortably, particularly when gross-up lifts the counted income and the property type or occupancy needs a different cap.
The decision comes down to three questions. How strong is your credit? How tight are your ratios? How many years does your support order have left? Answer those honestly, and the choice usually makes itself.
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches. Lendmire is a mortgage broker licensed for consumer lending in 16 states, and every figure here is subject to lender guidelines and full file review, not a commitment to lend. Call 828-256-2183 to talk through your file, or request a scenario review with Lendmire.
Frequently Asked Questions
Do I have to list child support on my application?
No. Disclosure is your choice. A conventional lender may count it only if you list it and ask for it to be considered. If it is not on the application, it is not part of your qualifying income. Leave it off only if you can qualify without it.
Does child support I pay hurt my chances?
Yes, it can, because both programs treat support you pay as a debt in your ratio. A larger payment raises your debt-to-income ratio, which may point you toward FHA’s wider ratio room. Bring the order and your payment records so the lender counts it accurately.
What if my support order ends soon?
The lender may exclude the income. FHA’s legacy handbook text describes a three-year continuance concept, and conventional lenders apply their own test. Ask your loan officer to run the file with and without the support so you see where you stand.
Can informal or voluntary payments count?
Sometimes. These typically need a written agreement and a longer deposit history than a court-ordered payment. A short history usually means the lender averages the amounts instead of using the latest one. Expect more documentation, not less.
Can I switch from conventional to FHA, or the other way?
Yes, a cash-out refinance replaces your existing mortgage, so the new loan can be a different type. Your equity after appraisal, your credit, and the 12-month own-and-occupy test for FHA cash-out all matter. Compare both before you decide.
For current guidelines and terms, see Lendmire’s FHA loan programs page.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Lendmire arranges FHA, VA, conventional and jumbo purchase and refinance loans through wholesale lenders; every file is underwritten by the lender under the applicable program guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. HUD 4155.1 Chapter 4, Section E (legacy handbook)
3. Fannie Mae Eligibility Matrix
4. Fannie Mae Selling Guide B2-1.3-02: Limited Cash-Out Refinance Transactions
5. CFPB Ability-to-Repay and Qualified Mortgage Rule Compliance Guide
6. CFPB: CFPB Report Finds Cash Out Mortgage Refinance Borrowers Improve Credit Scores
This article is part of Lendmire’s FHA cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: FHA Cash-Out Refinance vs Conventional Cash-Out Before Six Months on Title · FHA Cash-Out Refinance vs Conventional Cash-Out Without Selling the House · FHA Cash-Out Refinance vs Conventional Cash-Out Without Bringing Cash to Closing
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.