How much can alimony payments be grossed up to apply for a loan?

Alimony payments can typically be grossed up by 25% when applying for a mortgage loan. This practice recognizes that while alimony is a reliable source of income, it may not be fully taxed due to individual financial situations. By grossing up the alimony, lenders can better assess the borrower's total income and improve their chances of qualifying for a loan.

The 25% gross-up allows the lender to account for potential tax implications that might affect the borrower's net income. This adjustment provides a more accurate reflection of the borrower's financial capabilities, enabling them to qualify for a higher loan amount based on perceived income. Understanding this gross-up percentage is essential for borrowers relying on alimony to demonstrate their ability to repay a mortgage.