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Mortgage Approval With Tax Lien
Does you company work to get subordinate agreements from IRS for buyers who have a tax lien in California?
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Getting a mortgage while there is a tax lien is difficult, but it can be done if certain conditions are met. Some lenders may consider approving a mortgage for someone with a tax lien, like those who offer non-qualified mortgages (non-QM). Suppose they have an IRS payment plan or can secure an IRS subordination agreement. A subordination agreement allows the mortgage to take priority over the tax lien in case of default.
If you need help getting an IRS subordination agreement, your lender or mortgage broker can assist you. They’ll likely need experience working with these situations. Some companies specialize in helping buyers with tax liens that could step in if necessary. Make sure your lender allows it. Federal tax liens and qualifying for an FHA, VA, USDA, or conventional loan follow some specific guidelines:
FHA Loans
Before applying, the borrower must have an IRS payment plan and proof of three consecutive payments. The three months of payments cannot be made at once as lump sums.
VA Loans
Like FHA loans, the borrower must establish a repayment plan with the IRS. Supporting documentation and consistent payments will be required.
USDA Loans
The borrower will need a repayment agreement and evidence of timely payments on the debt that are not delinquent.
Conventional Loans
Fannie Mae and Freddie Mac’s guidelines on outstanding tax debts on conventional loans are as follows: You can have a written payment agreement with the IRS and be on a payment plan. However, you cannot have a tax lien. You can owe the IRS money and be on a payment plan.
An IRS subordination allowing the mortgage to take the first lien position must be agreed upon, and a payment plan with proof of payment consistency is also needed.
All loan types require meeting general credit, income, and debt-to-income ratio guidelines. Working with experienced lenders who understand what’s expected here is important.
If this sounds like something worth exploring further, reach out directly via phone or email so we can discuss your situation together!