Keeping The House After A Divorce: How The 6/36 Rule Affects Your Ability To Qualify

October 22, 2019

Once you and your spouse decide to split, you’ll have many issues to work out: not the least of which is deciding what to do with the family home. If you have children together, one of you could make a strong argument for staying on and raising the kids in what is possibly the only home they’ve ever known. As long as you both agree to the arrangement, the process should be as simple as informing each attorney that one spouse plans to stay in the home, right?

Unfortunately, it’s not that simple.

The first step in the process will be to determine whether the occupying spouse can qualify to stay in the home.  To do this, you’ll divide the marital debts and assign repayment responsibility to the appropriate party (he pays his debts, she pays hers). I’ll go over marital debt in more detail in an upcoming post, but once you’ve worked out who owes what, you’ll need to decide who will actually own the home.

If you and your spouse decide to continue co-owning the home, how will you hold title? If possession of the home will transfer solely to the occupying spouse, can that person afford the new monthly mortgage payments? And if you decide they can afford the payments, will the bank agree?

That last question is important because, in order to refinance the home, the spouse who keeps it must prove they can afford it.

All the standard income sources are used to determine affordability. These are your primary and secondary jobs, rental income, earnings from a side hustle, and so on. But mortgage companies will only consider alimony and child support as qualifying income if they meet the two conditions of the 6/36 rule.

The 6/36 rule states:

  • The recipient has received the support income reliably for at least 6 months

and

  • They will continue to receive the income for at least 36 months after applying for the loan

So, as long as support payments are current for the prior six months—and scheduled to continue for at least 36 months—the occupying spouse can claim it as qualifying income.

But watch out! If the non-occupying spouse made mortgage payments in lieu of spousal support at any point during the past six months, those payments will be disqualified! Likewise, if support payments have a step-down option that kicks in before the 3-year mark, the payments won’t count.

Setting yourself up for financial success is a critical component of divorce. To make sure you’re getting the best representation and starting out with a financially robust post-divorce life, talk to your attorney about enlisting the help of a Certified Divorce Real Estate Expert.

BAY AREA DIVORCE REALTOR®

SHANNON ROSE/ROSE GROUP
DRE #01422955

KW BAY AREA ESTATE
DRE #01526679

16780 LARK AVE.
LOS GATOS, CA 95032

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