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I've been trying to read as much as possible but haven't run across this situation documented/discussed. I've been on a payment plan with the IRS for back taxes dating back to 2004 for about a year. No liens have been filed. In December I changed banks and due to the govt shutdown the paperwork didn't get processed for my new bank so one payment was missed. The plan is still in place and scheduled to begin pulling from my new bank in February.
My goal was to buy a home in the May/June/July timeframe but now I'm concerned that I won't be able to show 12 months of payment under this plan. I do plan to disclose the $500/month payment as my DTI is 8% even with the $500 and my credit scores are in the low 700's. I contacted the IRS to make the payment but they told me it wasn't possible to clear up that missed payment.
Am I screwed on my timeline? Will I have to wait to get 12 months of on-time payments again? Any advice would be greatly appreciated! I haven't owned a home since 2005 and I really would like to!
This can still be acceptable if you provide a detailed letter of explanation (I'd make sure it includes a timeline of the events) and you are pretty well qualified in all other aspects (down payment, credit, DTI). It'd be a bigger deal if you had a tax lien, but since it's just income taxes owed an underwriter shouldn't be that hard on you, especially since it sounds like you'll have a few more months of on time payments before you close.
I am in the process of a refi and disclosed my IRS payment plan for the DTI, however when they pulled my credit it did not show up. Are you sure it is on your reports?
@myhomenow wrote:I am in the process of a refi and disclosed my IRS payment plan for the DTI, however when they pulled my credit it did not show up. Are you sure it is on your reports?
Unless it's an IRS tax lien, it will not be on your credit reports.