Can You Buy a Home If You Owe Back Taxes?

Can You Get a Mortgage If You Owe the IRS?

Buying a home is a major milestone, but if you have unpaid taxes, you might wonder if getting a mortgage is even possible. While owing back taxes can create challenges, it doesn’t automatically disqualify you from purchasing a home. However, lenders will assess your tax debt and how it impacts your ability to repay a loan.

The key is how your tax debt is being handled—lenders want to see a repayment plan in place before approving a mortgage.

How Owing Back Taxes Affects Your Home Purchase

Most mortgage lenders check for outstanding tax debts as part of the loan approval process. If you owe taxes, it may:

• Raise red flags for lenders, making approval more difficult.
• Lower your credit score, affecting loan eligibility.
• Trigger a tax lien, which could block mortgage approval.

Mortgage Options for Homebuyers Who Owe Taxes

Not all mortgage lenders automatically reject applicants with tax debt. Some loan programs allow you to buy a home while owing taxes if you meet certain conditions.

1. FHA Loans

• The Federal Housing Administration (FHA) allows homebuyers with tax debt to qualify if they have a repayment plan with the IRS.
• You must provide proof of three on-time payments before applying.
• No lump-sum payments are required—you just need to show consistency.

2. Conventional Loans

• Most conventional lenders require that all tax liens be paid before mortgage approval.
• If you’re on a repayment plan, some lenders may accept proof of regular payments instead of full repayment.
• A higher credit score and down payment may improve approval chances.

3. VA and USDA Loans

• VA and USDA home loans require applicants to be current on all federal obligations.
• If you owe taxes, you must have an IRS payment plan in place and be up to date on payments.

How to Improve Your Chances of Getting a Mortgage

If you owe back taxes and want to buy a home, take these steps:

• Set Up an IRS Installment Agreement – A formal repayment plan proves to lenders that you are handling your tax debt responsibly.
• Make On-Time Payments – Most lenders require proof of three consecutive payments before considering your mortgage application.
• Request a Tax Lien Withdrawal – If a tax lien is filed, ask the IRS about removing it after you begin payments.
• Improve Your Credit Score – Pay off other debts and avoid late payments to boost your mortgage eligibility.
• Increase Your Down Payment – A larger down payment may reassure lenders and offset risk.

How IRS Trouble Solvers Can Help

If back taxes are standing between you and homeownership, IRS Trouble Solvers can help by:

• Setting up a repayment plan that meets mortgage lender requirements.
• Negotiating tax debt settlements to reduce what you owe.
• Requesting a tax lien removal for smoother mortgage approval.
• Helping you stay compliant with IRS rules so you don’t risk losing your home.

Homeownership is still possible—even if you owe taxes. Contact us today for a free consultation and get on the path to buying your dream home.