Why Language Matters in Divorce Settlement Agreements—Especially for Mortgage Financing

When navigating the already complex waters of divorce, it's easy to overlook how certain terms used in your settlement agreement can have long-term consequences—especially when it comes to mortgage financing.

One of the most common (and costly) mistakes we see is using the terms alimony, maintenance, and spousal support interchangeably. While they might mean the same thing to you and your attorney, not all mortgage lenders or agencies interpret them equally. And unfortunately, that small detail can make a big difference in your ability to qualify for a mortgage post-divorce.

Not All Support Is Treated Equally by Mortgage Lenders

Here’s where it gets tricky: some lending agencies treat alimony differently than maintenance or spousal support—even if they’re functionally the same thing in your divorce agreement. For example, one mortgage agency may allow alimony payments to be deducted from gross income, which improves the borrower’s debt-to-income (DTI) ratio. But that same agency may not allow maintenance or spousal support to be treated the same way—instead, they classify them as liabilities, which can hurt the borrower’s chances of qualifying.  See the example below:

Jonathan’s income: Alimony:	$10,000	$10,000 ($1,000)
Debt Load: Maintenance:	$2,000 $1000	$2,000
Debt to Income: (DTI)	30%	22%
If the max dti for housing is 45% - the amount available for new housing expense is…	$1,500/mo Allowable for housing expense	$2,050/mo Allowable for housing expense

This distinction can drastically affect your mortgage application, either by reducing your purchasing power or preventing approval altogether.

How to Avoid This Mistake

The good news? This issue is completely avoidable—with the right language in your settlement agreement.

If you’re the party paying support and plan to apply for mortgage financing, make sure the terminology used in your divorce documents is aligned with what lenders will recognize. In many cases, simply clarifying that “maintenance” and/or “spousal support” is synonymous with “alimony” can make all the difference.

At Athena Mortgage Group, we work closely with divorcing clients and their legal teams to ensure the support terms used in settlement agreements won’t create unexpected roadblocks later on. Our goal is to preserve every opportunity available to you after the divorce is finalized.

Divorce is already complicated—don’t let unclear language add unnecessary stress to your financial future. If you’re going through a divorce and planning to buy or refinance a home, consult with a Certified Divorce Lending Professional (CDLP®️) who understands how divorce agreements interact with lending guidelines. We’re here to help ensure the financial chapter that follows your divorce is as smooth and empowered as possible.