New Yorkers who have outstanding tax debt may have trouble purchasing homes. When taxes are unpaid, the Internal Revenue Service can place liens on the property that the taxpayers own. Lenders look askance at unpaid tax debt. However, people can potentially purchase homes when they have unpaid tax obligations.
The best approach for people who have unpaid tax debt is to try to repay it before attempting to get mortgages. People who are unable to repay all of the unpaid tax debt should attempt to repay at least a portion of it to make lenders likelier to approve their mortgage applications. The taxpayers will need to work together with their mortgage lenders to find out what they need to do to be approved.
It is possible to get an FHA-backed loan with unpaid tax debt. However, the lender will likely require the applicant to go through a manual underwriting process. The taxpayer may be asked to provide proof that he or she has entered into an agreement with the IRS to repay the debt and has made at least three months of payments under the agreement on time. To get a VA loan, the applicant may need to show proof that he or she has made 12 months of on-time payments to the IRS under an agreement.
Unpaid tax debt can make it harder for people to get approved for mortgages. People who owe unpaid taxes might want to work out payment plans with the IRS and make their payments as agreed. They might also want to get help from a lawyer with experience in real estate, commercial and residential, to identify ways that they might be able to qualify for a mortgage. A lawyer might also help his or her client to find lenders that might be more willing to work with him or her so that the client can purchase a home.