Home Loan With Tax Lien: How To Qualify And Get Approved
If you have a tax lien and think buying a home is out of reach, think again. Many people believe a tax lien automatically means loan denial. But the truth is, you can get a home loan with a tax lien if you know the rules and follow the right steps. At Gustan Cho Associates, we help borrowers with IRS debt, judgments, and other credit challenges daily.
This guide includes everything you need to know about getting a home loan with a tax lien or judgment in 2025. You’ll learn which loan programs allow it, what steps to take, and how to improve your chances of getting approved.
What Is a Tax Lien?
A tax lien is a legal claim by the government when you owe back taxes. It gives the IRS or your state the right to collect from you, possibly by garnishing wages or placing a lien on your home or bank accounts.
While a tax lien is serious, it doesn’t have to block you from becoming a homeowner. Mortgage lenders look at how you’re handling the debt, not just the fact that it exists.
Can You Get a Home Loan With a Tax Lien?
Absolutely! You can get a home loan even if you have a tax lien. Just make sure you have a signed payment plan with the IRS or your state. It’s important to show that you have made your payments on time for several months. The required number of months can change based on the type of loan you are applying for. You’ll also need proof of those payments—things like canceled checks or bank statements work well.
Remember, each loan program, whether FHA, VA, USDA, or Conventional, has its own rules regarding tax liens.
Have a Tax Lien or Judgment? You Can Still Qualify for a Home Loan!
Contact us today to explore your options and see how we can help you get approved.
FHA Home Loan With Tax Lien
FHA loans are a solid choice for folks looking for a home loan with tax lien since specific rules make it possible. You’ll need a written agreement with the IRS and have made at least three on-time payments to qualify. Plus, you’ll need to show proof with three months of canceled checks or bank statements. Remember that these payments must be made on time and can’t be paid in advance. At Gustan Cho Associates, we stick to HUD guidelines without any extra hoops to jump through. We can help you qualify for a loan if you meet FHA’s requirements.
VA Home Loan With Tax Lien
If you have served in the military, you might want to consider a VA loan. This type of home loan is special because it allows you to purchase a house even if you have a tax lien. You must meet some important rules to qualify for a home loan with tax lien through the VA. First, you must have a payment agreement with the IRS. Second, you need to show that you have made on-time payments for at least 12 months.
This is stricter than FHA’s rule, which only requires three months of on-time payments. However, if you have consistently paid your IRS debt, meeting these requirements can be achievable.
USDA Home Loan With Tax Lien
If you are interested in a home loan with tax lien, it is important to know some rules. Just like with FHA loans, the USDA requires that you have a written payment plan with the IRS. You must also have made at least three payments on time, and you will need to show proof that these payments were made. USDA loans are great for people with low to moderate incomes who want to buy homes in rural and suburban areas. If you live in an area that qualifies and meets the guidelines, you can get a home loan with no down payment at all.
Conventional Loan With Tax Lien
Conventional loans backed by Fannie Mae or Freddie Mac come with strict rules regarding tax liens. Specifically, you cannot qualify for this type of financing with an active tax lien. However, it is permissible to have tax debt as long as it is not a lien and you are enrolled in a formal payment plan. To proceed with closing, you must make at least one payment under that plan. If you currently have a lien, you will either need to settle it or request that the IRS subordinate the lien, allowing the mortgage to take priority over the tax lien.
What If I Also Have a Judgment?
Judgments are even more serious than tax liens. A judgment is a court order saying you owe money and allowing the creditor to collect it legally.
You can still get a mortgage with a judgment if:
- You have a written payment plan with the creditor
- You’ve made at least 3 on-time payments
- You provide proof with canceled checks or bank records
You can also pay off or settle the judgment before closing. Some lenders may require you to do this.
How Do I Get a Written Payment Agreement?
To qualify for a home loan with a tax lien, you need to contact the IRS or state tax authority and:
- Set up a formal installment agreement
- Start making monthly payments
- Ask for documentation to show your plan and payment history
For judgments, contact the creditor or their attorney. Ask if they’ll accept a payment plan or settle the debt for less than the full amount.
Does Credit Repair Help With Tax Liens or Judgments?
Even if a lien or judgment is deleted from your credit report, mortgage lenders do a third-party check with companies like LexisNexis. So, removing it from your report doesn’t make it disappear.
You must address the debt directly with the IRS or the creditor to qualify.
How Long Do Tax Liens and Judgments Stay on Credit Reports?
- Tax liens: 7 years from the date they’re paid off
- Judgments: 7 years from the filing date, but they can stay enforceable for 10-20 years, depending on the state
Even if they fall off your credit report, they can still be discovered and used against you when applying for a mortgage.
Tips to Improve Approval Chances for a Home Loan With Tax Lien or Judgment
Here are steps to boost your chances of getting approved for a home loan with a tax lien or judgment:
- Get the payment plan in writing
- Make the required number of on-time payments
- Keep proof of those payments
- Avoid new credit issues
- Work with a lender who understands these guidelines
At Gustan Cho Associates, we don’t impose extra rules or overlays. We only go by the agency guidelines, meaning more approvals for borrowers with challenges like tax liens.
Can I Settle My Judgment or Tax Lien?
Yes. You don’t always have to pay the full amount. Many creditors and even the IRS are open to negotiated settlements. If you settle, get a release of judgment or lien and make sure it’s reported as satisfied.
This makes qualifying easier and allows you to close on your home faster.
What Lenders Accept Borrowers With Tax Liens?
Not all lenders are willing to work with tax liens. Many have overlays that require liens to be fully paid off.
Gustan Cho Associates is different. We specialize in helping people get a home loan with tax lien, even when other lenders say no.
We work with FHA, VA, USDA, and non-QM programs with flexible guidelines for:
- Active tax liens
- Judgments
- Low credit scores
- Past bankruptcies or foreclosures
Struggling with a Tax Lien or Judgment? We Can Help You Get Approved for a Mortgage
A tax lien or judgment doesn’t automatically disqualify you from a home loan. Reach out now to learn how we can assist you in navigating this challenge and securing your financing.
Final Thoughts: You Can Still Get a Home Loan With Tax Lien
A tax lien doesn’t mean your dream of owning a home is over. With the right plan, lender, and documentation, qualifying for a home loan with tax lien in 2025 is possible.
We help borrowers who are dealing with IRS debt or judgments every day. Whether you’re applying for an FHA loan, VA loan, or USDA loan, we can walk you through the steps to get approved.
Ready to See If You Qualify?
Contact Gustan Cho Associates at 800-900-8569 or send us a text for a faster reply. You can also email us at alex@gustancho.com. We’re here 7 days a week, including evenings, to help you get started.
Don’t let a tax lien hold you back. Let’s make homeownership possible for you—starting today.
Frequently Asked Questions Home Loan with Tax Lien:
Q: Can I Really Get a Home Loan with a Tax Lien?
A: Yes! You can still get a home loan with tax lien if you have a written payment plan with the IRS or your state and have made a few on-time payments. Lenders want to see you’re handling the debt responsibly.
Q: How Many Payments do I Need to Make Before Applying for a Home Loan with Tax Lien?
A: That depends on the loan program. FHA and USDA usually want to see 3 on-time payments. VA loans require 12 months. For conventional loans, you must at least make one payment if it’s not yet a lien.
Q: What Proof do I Need to Show for a Home Loan with Tax Lien?
A: You’ll need to show canceled checks, bank statements, or any document that proves you’ve made the required payments under your tax repayment plan.
Q: Do I have to Pay My Tax Lien Before Getting a Mortgage?
A: Not always. To qualify for a home loan with tax lien, you don’t have to pay it off if you have a payment plan and meet the guidelines. However, some lenders may require full payment, and Gustan Cho Associates does not.
Q: Which Loan Programs Let Me Get a Home Loan with Tax Lien?
A: FHA, VA, and USDA allow a home loan with tax lien if you’re in a payment plan and making on-time payments. Conventional loans do not allow an active lien but allow tax debt under agreement.
Q: What if I Also have a Judgment? Can I Still Buy a Home?
A: Yes, you can still get a home loan with tax lien and a judgment if both have written payment plans and you’ve made at least 3 on-time payments. Or, you can settle or pay off the judgment before closing.
Q: Can I Use Credit Repair to Remove a Tax Lien and Get a Mortgage?
A: No. Even if a tax lien is removed from your credit report, lenders will still find it through public record searches. The best way to qualify for a home loan with tax lien is to deal with the IRS directly.
Q: How Long will a Tax Lien Stay on My Credit?
A: A paid tax lien stays on your credit for 7 years. But even after it drops off your report, it can still show up when you apply for a home loan with tax lien through a third-party check.
Q: Can I Settle My Tax Lien or Judgment for Less and Get Approved?
A: Yes. You can often settle for less than you owe. Just make sure the lien or judgment shows up as “satisfied” or “paid” so you can move forward with a home loan with tax lien.
Q: Who Can Help Me Get Approved for a Home Loan with Tax Lien?
A: Many lenders refuse tax liens, but not Gustan Cho Associates. We help borrowers get a home loan daily with tax liens, judgments, or other credit issues. Call us today to see if you qualify!
This blog about “Home Loan With Tax Lien And Judgment Mortgage Guidelines” was updated on April 29th, 2025.
Worried About a Tax Lien or Judgment Affecting Your Loan?
Get in touch with us today for personalized guidance and to explore your financing options.
