The Quick Read: Lenders count child support you receive as qualifying income only if it is likely to keep arriving for at least three years past closing and you can show it has been arriving. They then run it through the same debt-to-income test as any other income, using the new, larger payment. FHA cash-out also caps the new loan at 80% of the home’s value, so equity limits the outcome as much as income does. Every point here is subject to lender guidelines and full file review, and nothing is a commitment to lend.
What Does This Loan Actually Look Like?
An FHA cash-out refinance replaces your current mortgage with a new, larger FHA loan. You keep the difference in cash. The home must be your primary residence, and you must have owned and lived in it for 12 months before the case number is assigned. (The case number is the FHA’s file ID for your loan.)
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.
In short, the new loan can reach 80% of the home’s appraised value. Lendmire is a mortgage broker, not a lender. It arranges these loans through wholesale lenders, and those lenders do the underwriting.
The wider rules come from HUD. HUD’s Single Family Handbook 4000.1 governs how FHA lenders treat income, and its glossary defines child support income as money received from a former spouse or partner, or from a non-custodial parent of your minor dependent. The Handbook is updated often, so a lender’s current reading of it is what counts.
How Does the Underwriter Read Your File, Step by Step?
Underwriters work through the same sequence on nearly every file. Knowing it lets you fix problems before they become conditions.
1. Eligibility gate. The lender confirms the home is your primary residence and that you have owned and occupied it for the 12 months before the case number. Utility bills or employment records usually back up occupancy.
2. Payment history. The lender checks that your existing mortgage payments were made on time over the past year. A modification or forbearance plan gets extra review under HUD Mortgagee Letter 2020-30.
3. Income build. The lender totals your wages, any other income, and the child support, if you chose to rely on it.
4. Support test. Two questions: does the paperwork show the support continuing, and does your bank record show it arriving?
5. Debt-to-income test. The lender adds up the new housing payment and your other monthly debts, then divides by gross monthly income. The automated underwriting finding governs most files. Where a file is reviewed against fixed ratios, the base pair is 31/43 (housing cost over income, then total debts over income), and documented compensating factors can stretch it as far as 40/50 at the top tier.
6. Appraisal and sizing. The appraisal sets the value. The new loan, including financed closing costs and the upfront mortgage insurance premium, must fit under the 80% cap.
7. Conditions. The underwriter lists what is missing. Child support files often get conditions for the decree, deposit records, or a clearer end date.
Step six matters more than people expect. A strong credit score does not raise that 80% ceiling. Credit affects approval. The cap is fixed.
When Does Child Support Count as Qualifying Income?
It counts when the lender can document the right things, starting with the obligation and the receipt. Miss one of them and the income drops out, even if the money shows up every month.
The obligation. The lender needs a final divorce decree, a legal separation agreement, a court order, or a written voluntary payment agreement. The document must show how much is owed and when it ends.
Continuance. The lender must be satisfied that payments are likely to continue for at least three years after closing. This is the rule that trips up the most borrowers. If the youngest child ages out of support in two years, the support generally cannot be counted. Check the order itself, because ending dates are set by state law and the court, and age 18 is not a safe assumption.
Receipt. Under a court order or decree, lenders typically want a recent history of payments arriving, shown by bank deposits, cancelled checks, or child support agency records. Voluntary arrangements with no court order carry a heavier burden, usually a longer paper trail such as a year of deposits or tax returns. Confirm the exact periods with the lender, because the Handbook controls and its section dates change.
Receiving support for six months is not enough on its own. Receipt history is half of the test. The three-year outlook is the other half.
Do You Have to List Child Support, and Must the Lender Count It?
You do not have to list it. Under Regulation B, a lender or broker may ask about child support, alimony, or separate maintenance income only after telling you that you need not disclose it if you do not want it considered. The CFPB’s consumer guidance says the same.
The trade-off is simple. Leave it off, and the lender cannot use it to qualify you. Rely on it, and the lender must evaluate it fairly, counting it to the extent it is likely to be consistently paid.
Plenty of borrowers qualify on wages alone and never disclose support. Others need it. If the new payment pushes your debt-to-income ratio past what your wages can carry, support income may be what keeps the file workable.
How Does Support Income Enter the Debt-to-Income Math?
Support you receive is added to your gross monthly income. That lowers your ratios, because the same debts are divided by a bigger number. Support you pay works the opposite way. It is a recurring debt on the other side of the ratio.
If you do both, for different children, expect the lender to treat the two streams separately. The received side goes into income, subject to the three-year test. The paid side goes into liabilities.
Some support is not taxed, and FHA allows lenders to “gross up” non-taxable income. Grossing up means adjusting the income upward to reflect the tax you would have paid on it, so it compares fairly with taxable wages. The lender must document how it arrived at the figure. Whether your support is actually non-taxable is a lender documentation question. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
A worked picture, with no dollar figures: say a borrower earns wages that put the new payment near the top of the allowed ratio. Without support, the file sits right at the edge. With a documented, three-years-forward support order added in, the ratio drops comfortably inside the guideline. Take the support out because the youngest child ages out of support in two years, and the file goes back to the edge. The money did not change. The documentation did.
How Do Different Situations Get Treated?
| Scenario | How lenders typically treat it |
|---|---|
| Order runs well past three years | Usually countable with proof of receipt |
| Youngest child ages out inside three years | Usually excluded |
| Payments arrive irregularly | Often excluded or averaged, per lender review |
| Back support (arrears) owed to you | Generally not counted as ongoing income |
| Voluntary agreement, no court order | Counted only with a longer paper trail |
| Order has no stated end date | Needs the underwriter’s judgment, often a clarifying document |
None of these outcomes is automatic. Different underwriters read the same paperwork differently, which is part of why shopping a file matters.
What Documents Should You Gather First?
Pulling these together before you apply prevents most condition letters.
| Document | What it proves | Common pitfall |
|---|---|---|
| Decree, court order, or agreement | Amount owed and end date | Missing pages or an unsigned copy |
| Recent bank statements | Support is actually arriving | Cash or mixed deposits you cannot trace |
| Child support agency records | Payments made through the agency | Records that stop partway through the period |
| Prior tax returns | History for voluntary arrangements | Support not shown anywhere |
| Occupancy proof | Primary residence for 12 months | Utility bills in a former spouse’s name |
Highlight the support deposits on your statements. Underwriters should not have to hunt for them.
Where Does the General Rule Break?
Divorce buyouts. If you are refinancing to pay out a former spouse, the decree or settlement agreement is part of the file. Any cash you keep beyond the buyout makes the loan a cash-out. The same decree often serves as your support documentation, so the paperwork overlaps.
Inherited homes. There is no minimum prior occupancy for an inherited property. But if you rent it out after inheriting, you are not eligible for cash-out until you have lived in it as your primary residence for 12 months.
Second homes and rentals. Standard FHA cash-out is for primary residences. Occupancy decides the leverage, and a second home or rental does not qualify.
Streamlines. The FHA Streamline refinances an existing FHA loan with no appraisal, a limited credit review, and a net tangible benefit. It does not give you cash back, so it is a different tool.
Rate-and-term. An FHA rate-and-term refinance with an appraisal can reach 97.75% on a primary residence you have occupied for the previous 12 months. If you do not need cash out, that higher ceiling can make it the better fit.
Hawaiian Home Lands. The 80% cap does not apply to Section 247 mortgages. This is rare, but it is a real exception.
Why Is the Cash-Out Cap 80%?
The cap used to be higher. HUD cut it in Mortgagee Letter 2019-11, which applies the 80% limit to both loan-to-value and combined loan-to-value, measured against adjusted value. FHA had earlier moved the cap from 95% to 85%. HUD’s press release described the 2019 change as a way to reduce risk in cash-out lending.
For you, the cap works like this. Closing costs and the financed upfront premium count toward it. FHA’s upfront premium is 1.75% of the base loan, and the annual premium runs between 0.15% and 0.75% of the balance, depending on term, loan amount, and LTV. On a thirty-year loan above 90% LTV, the annual premium lasts for the term. At or below 90%, it ends after eleven years. These are program mechanics, not prices, and the Loan Estimate shows what applies to you. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Net cash is therefore smaller than the raw equity gap suggests. Take the 80% figure, subtract what you owe, subtract financed costs, and what remains is what you can take out.
How Should You Decide?
Start with three questions.
Does the support order hold up? If it ends within three years of closing, plan on qualifying without it. If you cannot qualify without it, the cash-out may not work.
Do you need the support to qualify? If wages carry the file, you can keep the support off the application. If you need it, gather the documents first.
Is cash-out the right tool? Compare it with keeping your current loan, with a rate-and-term refinance, and with other loan types. Veterans have another route, covered in Lendmire’s piece on the best VA cash-out refinance program when child support counts as income.
There is no single best program. The right fit depends on your equity, your credit profile, how long the support runs, and what the cash is for. A broker can shop a scenario across several wholesale lenders and match it to the program whose guidelines suit it. Honestly, this is where a broker earns the role: one underwriter’s reading of your support order can differ from another’s.
Key Terms Defined
Continuance: the lender’s finding that support is likely to keep arriving for at least three years after closing.
Gross-up: raising non-taxable income on paper by a documented percentage so it compares fairly with taxable wages.
Debt-to-income ratio (DTI): your monthly debts divided by your gross monthly income.
Adjusted value: the value figure FHA uses to measure the 80% cap on a cash-out loan.
Case number: the FHA identifier assigned to your loan, which starts the 12-month occupancy count.
Combined loan-to-value (CLTV): the total of all liens on the home divided by its value.
Frequently Asked Questions
Can I use child support if I have only received it for a few months?
It depends on the order and the lender. Under a court order, lenders generally want a recent history of receipt plus proof it will continue three years. A short history can sometimes be supported by agency records. A voluntary arrangement usually needs a longer trail.
What if my youngest child reaches the age where support ends in two years?
Usually, the support is left out. The three-year test looks forward from closing. Check the exact end date in your decree, since states and courts set these dates differently. You may still qualify on other income.
Does paying child support hurt an FHA cash-out application?
Yes, it can. Support you pay is treated as a recurring debt and raises your DTI. If you pay for one child and receive for another, the lender handles each separately.
Will a higher credit score let me borrow more than 80%?
No. The 80% cap on FHA cash-out is fixed. A stronger score helps your approval odds and may affect your mortgage insurance, but it does not raise the ceiling.
Does the lender have to count my child support?
If you rely on it, the lender must consider it to the extent it is likely to be consistently paid. If you choose not to disclose it, the lender cannot use it to qualify you.
Next Step
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. Bring the decree, a few months of deposits, and your current mortgage statement, and the comparison gets concrete fast.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. 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 Single Family Housing Policy Handbook 4000.1
2. HUD Mortgagee Letter 2020-30
3. CFPB Regulation B, 12 CFR 1002.5
5. HUD Mortgagee Letter 2019-11
6. HUD press release PR 19-114
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: Best FHA Cash-Out Refinance Program for Senior Homeowners on a Fixed Income · How FHA Cash-Out Refinance Seasoning Requirements Work · Cash-Out Refinance Lenders to Move From FHA to Conventional With 20 Percent Equity
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.