topic !!!! Closing in Two Weeks / Back Taxes in Mortgage Loans

!!!! Closing in Two Weeks / Back Taxes

divorcesucks — Fri, 04 Apr 2025 21:18:18 GMT

I am self employed (S-Corp) ... closing in 15 days April 2025 .... LO just emailed to say "the tax transcript" shows $10k in unpaid taxes for tax year 2023, and I will owe for tax year 2024 as well, but it didn't show up. I don't have enough cash for down payment AND pay the tax bills, as my accountant wanted me to ammend the returns.

I have worked sooooo hard to build my credit back to 786 (mortgage 5,4,2) !!!

Loan Amount $241,000 ... PITI $1800 (just under) .... no other payments (car, credit card, NOTHING) ... average monthly income $5350 for the past two tax years

Any loan officers on here with advice / direction.

TIA !!!

Re: !!!! Closing in Two Weeks / Back Taxes

ShanetheMortgageMan — Fri, 04 Apr 2025 22:03:07 GMT

You'll either need to pay the income taxes or set up a payment plan with its payment included in your DTI. A lot of times the payment plan can be set up on IRS's website once you log into your personal account. Sounds like your DTI should be able to easily absorb a payment, but check with your LO first on how much of a payment you can absorb and still qualify. If your figures are correct then it should be possible up to around a $870/mo payment, but again, check with your LO.

Re: !!!! Closing in Two Weeks / Back Taxes

divorcesucks — Fri, 04 Apr 2025 22:44:42 GMT

Thank You

I just read the USDA U/W guidelines and I have to show 3 payments. OK back to panic mode. (insert very worried emoji face)

Re: !!!! Closing in Two Weeks / Back Taxes

ShanetheMortgageMan — Fri, 04 Apr 2025 22:47:06 GMT

Can you take out a personal loan to pay the IRS in full? Then you won't have to wait for the 3 months of payments, you just use the new personal loan payment in your DTI.

Re: !!!! Closing in Two Weeks / Back Taxes

divorcesucks — Sat, 05 Apr 2025 01:22:56 GMT

Great Question! I will investigate! Thank You!

Re: !!!! Closing in Two Weeks / Back Taxes

Yumsetti — Wed, 09 Apr 2025 02:56:02 GMT

Ask your Loan officer before taking out a personal loan! Even if it doesn't really affect your dti negatively, it's still a red flag for the LO and underwriting.

Re: !!!! Closing in Two Weeks / Back Taxes

GreatLife — Wed, 09 Apr 2025 12:48:26 GMT

3 months of payments or 3 payments with no time constraints? If you've spoken with the LO please give us an update. Thanks

Re: !!!! Closing in Two Weeks / Back Taxes

ShanetheMortgageMan — Wed, 09 Apr 2025 17:03:30 GMT

@GreatLife wrote:
3 months of payments or 3 payments with no time constraints? If you've spoken with the LO please give us an update. Thanks

USDA guidelines specify the following:

An applicant with delinquent Federal tax debt is ineligible unless they have proof of repayment plan(s) approved by the IRS. A minimum of three timely payments must have been made on each active repayment plan(s). Timely is defined as payments that coincide with the approved IRS repayment agreement(s). The applicant may not prepay a lump sum at one time to equal three monthly payments to meet this requirement. Refer to Chapter 11 for monthly repayment requirements. The lender must provide certification of the applicant’s eligibility to the Agency as part of the application submission. Evidence of the repayment agreement(s) and payment history used to support the lender’s certification to the Agency will be retained in the lender’s permanent loan file. While applicants with multiple approved IRS repayment plan(s) are eligible, the approved lender’s underwriter must review and determine if the applicant(s) is an acceptable credit risk.

That said, you don't have to wait 90 days. You can set up the first payment immediately, then the 2nd payment is paid on the 1st of the following month, then the 3rd payment is paid on the 1st of the 3rd month - so could be as little as 32 days.

Re: !!!! Closing in Two Weeks / Back Taxes

MauiMan85297 — Wed, 09 Apr 2025 22:25:12 GMT

Timely merely means that 3 months of on-time payments being made over a 90 day period. If your re-payment is $600 per month and you gave them $1800 you're still waiting 3 months for an UW to approve that.