topic Re: Is it still possible to get a first time buyers home loan while still owing back taxes in Mortgage Loans

Is it still possible to get a first time buyers home loan while still owing back taxes

Anonymous — Mon, 10 Aug 2009 03:54:52 GMT

Hi people,

I just had a question about owing back taxes while trying to get approved for a home loan. Our situation is pretty much this:

mine (fico) EXP (FreeCreditReport) 693, EQ 627, TU 617,

my wife (fico) EXP ???, EQ 800, TU 750+

Our monthly gross income is 13K a month, (me= 9K) (my wife=4K)

Monthly expenses lenders will look at:

$700 (600 to irs, 100 to state)(outstanding owed 38K to IRS, 8K to state)

$350 (car loan)

$200 (student loan)

$310 (car insurance)

$37.00 (credit card) ( typical balance of 1500 a month normally fully paid off)

1. I am concerned that the large amount of money owed to the IRS will affect us being approved for our first home. Is this true?

2. based on these number what would be the maximum amount we would be pre-qualified for?

3. If I've missed something above, what else do lenders look at?

4. With my FICO scores being the way they are (I have a poor payment history in the past), do they only look at the recent payments? It has been at least a year since my last late payment.

*** FYI We are looking to get a 350K first time buyers loan in the los angles,ca market ****

Message Edited by just-wondering on 08-09-2009 08:46 PM

Message Edited by just-wondering on 08-09-2009 08:54 PM

Re: Is it still possible to get a first time buyers home loan while still owing back taxes

Anonymous — Mon, 10 Aug 2009 15:25:40 GMT

I am wondering the same thing. I owe back taxes and am on a payment plan, but none of that is on my reports.

Re: Is it still possible to get a first time buyers home loan while still owing back taxes

203bravo — Mon, 10 Aug 2009 16:31:11 GMT

If you are current on a payment plan with the IRS then there should be issue securing a loan as long as other underwriting requirements are met. The tax credit is exactly that a credit and thus when you file and/or ammed your taxes then the credit will be applied to what you currently owe.

Sorry - you can't owe the IRS and then ask them for a check.

Re: Is it still possible to get a first time buyers home loan while still owing back taxes

virgoprincess823 — Mon, 10 Aug 2009 17:20:32 GMT

I'm in the middle of house hunting and have been pre-qualified through NACA. I owed IRS taxes for 2005 & 2007. Being as though the lenders only requires the past 2 years returns, I had to either be in a payment plan for 12 months for the taxes owed or pay the debt off before being qualified. In reading through the forums I believe 12 months on a payment plan is the key and they will just add the monthly payment amount in you DTI.

Re: Is it still possible to get a first time buyers home loan while still owing back taxes

Anonymous — Tue, 11 Aug 2009 17:37:06 GMT

Thanks everyone for your help. So it doesn't sound like if you are current with a payment plan it is not show stopper. Do they to Tax verification on FHA loans in California?

Re: Is it still possible to get a first time buyers home loan while still owing back taxes

WannaHouse — Tue, 11 Aug 2009 20:01:27 GMT

Federal debt (back taxes) has to be paid to qualify for a home. If you are in a payment plan, then maybe? If the 8K can be taken to clear your debt, yes. In your situation of owing so much, the chances are quite slim.

Edited to add: Oh wait...are you in a current payment plan? I missed the monthly payments to IRS.

Message Edited by WannaHouse on 08-11-2009 03:01 PM

Re: Is it still possible to get a first time buyers home loan while still owing back taxes

Anonymous — Wed, 12 Aug 2009 02:29:01 GMT

Yes I have an established payment plan with the State tax Board. I am currently pending decision of a Offer to Compromise with the IRS. If they deny I will start a payment plan. Keep in mind there is no Federal levy or judgement against me nor does it show up on my credit report. I am actively looking to resolve my debt with them. Do you think that changes anything? Is it still a slim chance?

Re: Is it still possible to get a first time buyers home loan while still owing back taxes

Anonymous — Fri, 11 Sep 2009 00:59:56 GMT

I just wanted to see if we can find a definative answer here. I have also read that being on a payment plan for over 12 months is OK. I have just never read any official guidelines.

Re: Is it still possible to get a first time buyers home loan while still owing back taxes

Anonymous — Fri, 11 Sep 2009 02:24:04 GMT

If you are still in negotiations with IRS I believe you are out of luck. It has to be paid off, or in a repayment plan for a minimum of 12 months. That is what I have heard/seen around here. You have to show not only the payment plan, but record of paying it on time for 12 months.

Re: Is it still possible to get a first time buyers home loan while still owing back taxes

ShanetheMortgageMan — Fri, 11 Sep 2009 18:25:56 GMT

Being on a payment plan for at least 12 months, with all payments paid on time, is technically the guideline for not requiring delinquent tax liens or judgments to be paid at closing. Just being on it for a few months doesn't suffice, but I've seen underwriters make exceptions when they are 10 or 11 months of payments made. If there is no tax lien or judgment filed yet, then typically the 12 months is not needed, one gal I helped in Sacramento was fine with only half a year, just provide the IRS installment payment agreement, any any cancelled checks/receipts/payment history to show all have been paid on time so far.