VA Loan and IRS Payment Plan

[Anonymous]

Hello! 

I have a question and was looking for some advice. I am going through the process of purchasing a home and using my VA entitlements. Wednesday I received the Initial Disclosures and it listed all of my debts that report to the credit report agencies. My question lies here, My wife and I had to amend our taxes which results in us owing money to the IRS, with the amendment we sent the paperwork to set up the payment agreement and as of today it is still processing. Am I supposed to let my lender know of the monthly agreement or not since it is not currently active. As far as my DTI I would still be in the guideline so I am not concerned about it affecting my loan approval I am more so concerned of inadvertenly commiting some un-ethical mortgage fraud. 

Thank you for your help!

[Sbrooks1]

Lender will most likely want to see 3-6 months of payments , can you just pay it off? Def talk to your lender sooner rather than later.

[StartingOver10]

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@dwilson1006 wrote:

Hello! 

I have a question and was looking for some advice. I am going through the process of purchasing a home and using my VA entitlements. Wednesday I received the Initial Disclosures and it listed all of my debts that report to the credit report agencies. My question lies here, My wife and I had to amend our taxes which results in us owing money to the IRS, with the amendment we sent the paperwork to set up the payment agreement and as of today it is still processing. Am I supposed to let my lender know of the monthly agreement or not since it is not currently active. As far as my DTI I would still be in the guideline so I am not concerned about it affecting my loan approval I am more so concerned of inadvertenly commiting some un-ethical mortgage fraud. 

Thank you for your help!

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Yes, let your LO know about the debt

[Anonymous]

I actually have a question for you regarding the payment plan. I am a loan officer and have a borrower who is in the process of setting a payment plan up. Without this payment plan from the IRS, we will not be able to close the loan. period. We don't need to see any payments...just that a plan has been set up and accepted by the IRS.

Do you typically know how long it takes for the IRS to complete and get back to you a payment plan?

[Anonymous]

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@Anonymous wrote:

I actually have a question for you regarding the payment plan. I am a loan officer and have a borrower who is in the process of setting a payment plan up. Without this payment plan from the IRS, we will not be able to close the loan. period. We don't need to see any payments...just that a plan has been set up and accepted by the IRS.

Do you typically know how long it takes for the IRS to complete and get back to you a payment plan?

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Usually a few weeks. Need a 3-month history of the IRS installment payment being made before closing as well. So if the borrower has not yet set up the agreement, it can take 4 or 5 months. Hopefully they have the funds to pay it off.

[Anonymous]

The payment plan having to be paid for three months is typically only in a case where the taxes weren't paid and a lien was put on the borrower. If it's just that you owe taxes, the debt can be added to the 1003 along with supporting docs to show the monthly payment, but don't usually have to make three monthly payment before closing.

[Sbrooks1]

FHA and USDA GL require a certain number of on time payments whether there is a lien or not. It's in both handbooks , so pretty sure VA will also .