A quote from Shanes post on this subject:
With FHA financing, the FHA/HUD doesn’t require IRS tax liens to be paid unless there is information that the IRS has required to be in first lien position (which is what any lenders concern is, not being on first lien position on title). However, if there have been regular and timely payments on the tax lien (most lenders require a 12 month history) and the IRS is willing to subordinate to the new mortgage (see FHA guidance below), the tax lien can remain open. A copy of repayment agreement is needed to include the payments in the debt ratio, a payment history is needed to confirm the payments have been timely, and often the lender will require a title insurance binder be provided indicating no exception to subordinated tax lien. VA & USDA follow the same.
to read the entire post here is that link:
http://ficoforums.myfico.com/t5/Mortgage-Loans/Getting-a-Mortgage-with-an-IRS-Tax-Lien/td-p/973570
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