15 Mar 2017

Tax Liens vs Back Taxes

Tax Liens vs Back Taxes

“I have a tax lien/back taxes. Can I get an FHA mortgage?”

I get this question often and wanted to share with you the difference between the two and how they are treated in regards to an FHA mortgage.

Tax Liens: IRS has been trying to collect their money for a long time. A lien now shows up on their credit. They need to have a payment plan in place. There must be at least 3 monthly payments made and those payments can’t be prepaid. Payment plans will need to be included into the Debt to Income Ratio. The tax lien will subordinate automatically to the FHA mortgage.

Back taxes: This is normally tied to a more current tax year. They will need an established payment plan from the IRS. There is no established time frame required for payments so we only need the payment plan from the IRS. Monthly payment must be included in the Debt to Income Ratio.

Hopefully this helps you in your business, or Home Search.

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Born and raised in Southwest Florida, I have been in the Mortgage business since 2001 I'm a grizzly, battle tested mortgage veteran. I am also the Host of Rates & Reels, which is the most popular fishing show in Southwest Florida, hosted by a guy named Tim. In my spare time I love spending time with my family, coaching baseball, and anything else my kids or wife want me to do. I would be happy to help you or someone you know with any of your Mortgage needs.

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