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IRS Installment Agreements and Mortgage Requirements

peter1974
Regular Contributor

IRS Installment Agreements and Mortgage Requirements

We just completed all the documentation to get our loan process started in preparation for closing. I know that if you owe taxes, they like to see a payment plan in place with on-time pays.

 

I owe about $50K in taxes and have been on an installment plan with the IRS for almost 2 years now and have been paying on time. When they request my tax return transcripts (form 4506-T) will this info be reflected? Or do I need mention and supply this separately? They didn't ask for it when we were prequalified.

Message 1 of 22
21 REPLIES 21
Northerngirl2
Valued Member

Re: IRS Installment Agreements and Mortgage Requirements

I just had to do this this week. I had told the LO about it beforehand and received a conditional approval. When they reviewed my bank statements, they asked about the IRS payment and added it to my debts. This didn't change my DTI so it wasn't a problem for me. I had to provide documentation so I supplied screenshots of the balance and payment history from the IRS website.  

Good luck!

F 8 - 5/20 EQ 683 EX 675 TU 684      FICO 5,4,2 - 5/20 EQ 694 EX 650 TU 685
F 8 - 10/20 EQ 703 EX 703 TU 702      FICO 5,4,2 - Closed 10/23/20!!

Goal 750

Current Cards - Venture1 CL $13,500 AAoA - 12 yr 10 mo AoOA - 19 yr 4 mo
Message 2 of 22
peter1974
Regular Contributor

Re: IRS Installment Agreements and Mortgage Requirements


@Northerngirl2 wrote:

I just had to do this this week. I had told the LO about it beforehand and received a conditional approval. When they reviewed my bank statements, they asked about the IRS payment and added it to my debts. This didn't change my DTI so it wasn't a problem for me. I had to provide documentation so I supplied screenshots of the balance and payment history from the IRS website.  

Good luck!


Thanks! How did it not impact your DTI?

Message 3 of 22
Northerngirl2
Valued Member

Re: IRS Installment Agreements and Mortgage Requirements

You're right, technically it did go from 14% to 18%, but zero impact on qualifying.

F 8 - 5/20 EQ 683 EX 675 TU 684      FICO 5,4,2 - 5/20 EQ 694 EX 650 TU 685
F 8 - 10/20 EQ 703 EX 703 TU 702      FICO 5,4,2 - Closed 10/23/20!!

Goal 750

Current Cards - Venture1 CL $13,500 AAoA - 12 yr 10 mo AoOA - 19 yr 4 mo
Message 4 of 22
peter1974
Regular Contributor

Re: IRS Installment Agreements and Mortgage Requirements


@Northerngirl2 wrote:

You're right, technically it did go from 14% to 18%, but zero impact on qualifying.


Ah ok! My payment plan is $400 a month and we don't have any car payments or other large loan payments so I don't think it will hurt us either.

Message 5 of 22
vertekal
Regular Contributor

Re: IRS Installment Agreements and Mortgage Requirements

Does your IRS payment plan show up on your credit reports? My credit union said i don't need to mention being on a payment plan as long as it's not reporting anywhere. 

FICO 8:
EQ: 1/2018: 494 | 4/2021: 652 (+158)
TU: 1/2018: 536 | 4/2021: 657 (+121)
EX: 1/2018: 499 | 4/2021: 641 (+142)

Mortgage Scores:
EQ: 9/2020: 560 | 4/2021: 648 (+88)
TU: 9/2020: 564 | 4/2021: 649 (+85)
EX: 9/2020: 576 | 4/2021: 672 (+96)

Message 6 of 22
Northerngirl2
Valued Member

Re: IRS Installment Agreements and Mortgage Requirements

@vertekal This debt does not show on my credit report and there are no liens for it. My LO said the same thing about reporting it, however underwriting came back and asked about the recurring $500 payment to the IRS on my bank statements. I provided the LOE and the documentation for the amount owed and the payments.

F 8 - 5/20 EQ 683 EX 675 TU 684      FICO 5,4,2 - 5/20 EQ 694 EX 650 TU 685
F 8 - 10/20 EQ 703 EX 703 TU 702      FICO 5,4,2 - Closed 10/23/20!!

Goal 750

Current Cards - Venture1 CL $13,500 AAoA - 12 yr 10 mo AoOA - 19 yr 4 mo
Message 7 of 22
vertekal
Regular Contributor

Re: IRS Installment Agreements and Mortgage Requirements

@Northerngirl2 thanks for the detail! 

FICO 8:
EQ: 1/2018: 494 | 4/2021: 652 (+158)
TU: 1/2018: 536 | 4/2021: 657 (+121)
EX: 1/2018: 499 | 4/2021: 641 (+142)

Mortgage Scores:
EQ: 9/2020: 560 | 4/2021: 648 (+88)
TU: 9/2020: 564 | 4/2021: 649 (+85)
EX: 9/2020: 576 | 4/2021: 672 (+96)

Message 8 of 22
peter1974
Regular Contributor

Re: IRS Installment Agreements and Mortgage Requirements


@vertekal wrote:

Does your IRS payment plan show up on your credit reports? My credit union said i don't need to mention being on a payment plan as long as it's not reporting anywhere. 


No, mine aren't showing on my reports nor do I have any liens.

 

But they do show up on my bank statements. So just to be on the safe side, I uploaded my payment plan info and pay history along with the last 2 year tax returns they asked for.

Message 9 of 22
JVille
Valued Contributor

Re: IRS Installment Agreements and Mortgage Requirements

It's a Debt whether in your report or not. Do not commit Mortage Fraud by failure to disclose a debt.

Message 10 of 22
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