My wife and I have an IRS Tax Lien. No one will work with us on a home loan (first time).

Asked by gpawf, Whittier, CA Mon Mar 4, 2013

Were looking to buy a home, and our credit is up to the point where we can qualify, but the IRS tax lien is obviously the deal breaker for the lenders. Publication 785 (IRS provision/rule/etc), is obviously a joke, and only meant to give the IRS the cover to say, they give folks a way out.

Is there anyone that knows how to work with/around/through an IRS tax lien, so we can purchase our first home, before we reach retirement age?

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Web reference:


Rodney Mason, Mortgage Broker Or Lender, Atlanta, GA
Tue Mar 5, 2013
An outstanding lien of any type impacts the title position of a mortgage. This means that the lien would have to be paid in full prior to closing on any mortgage. Otherwise, the mortgage would be in a 2nd lien position and that is not allowed since all mortgages must be in a 1st lien position.

Contacting the IRS and setting up a re-payment plan is your first step. The IRS may agree to a subordination of an IRS tax lien that is in a repaymetn plan if the borrower uses FHA financing. I had one a couple of weeks ago where the borrowers contacted the IRS and were told that they would not agree to a subordination.

Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
Apply Online at
Licensed in Alabama & Georgia with over a decade of mortgage lending experience.

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing.
3 votes
This is a huge part of the problem -- mortgage officers and underwriters who don't understand that purchase money mortgages do NOT take a 2nd position to tax liens. The lien is against the buyer's equity in the property. Also, FHA guidelines very explicitly allow federal tax liens if there is a payment plan in place and verified in writing.

Really wish so-called "experts" would stop talking out their behinds and start writing viable loans.
Flag Thu Aug 4, 2016
Rodney, as a senior loan officer, you certainly are not an expert on the subject. All mortgages are not required to be in a 1st lien position. If your theory were correct, there would be no such thing as a 2nd or 3rd mortgage or, a home equity line of credit. Would you care to update your answer with facts, rather than fairy tales?
Flag Thu Feb 25, 2016
Allen, Home Buyer, Colorado Springs, CO
Thu Jan 2, 2014
I have a 30k tax lien from 2007 federal taxes and have been pre-qualified for an FHA. The lender will need to tell the title company they are "accepting the title subject to the lien". I have an established payment plan which I believe FHA requires a history of at least 3 months payments.

In terms of IRS subordination, that is not required per the IRS web site. The specific excerpt is included below as is a direct link to the IRS source.

Here is the excerpt:

Is it necessary for the Internal Revenue Service to issue
a certificate of subordination giving the security interest
priority over the NFTL?
It is not necessary for the Internal Revenue Service
to issue a certificate of subordination in order for the
lender’s PMM or PMSI to have priority over the lien.

The direct link to this document on the IRS website is:
2 votes
Can you share the company in which you got your pre-qualified status from? We have been searching and can not find one. We keep getting the some run around about the Pub. 785 from the IRS.
Thank You,
Flag Tue Apr 22, 2014
Jeff and Kaye…, Agent, Colorado Springs, CO
Mon Mar 4, 2013
Agree with the answers below. Find a good attorney that specializes in tax liens and find out if it is something that you can actually fight or not. If not you're going to have to resolve it. I have heard of people negotiating their balances by having the IRS reduce the interest and fees that they keep adding on. I have never heard of the IRS reducing the original balance unless there was an error in the beginning or pretty significant circumstances.

After you get it resolved is the time to go out looking at homes. The IRS lien will never follow up so get it taken care of so you can acutally move on! Good luck!
2 votes
debrausher, Both Buyer And Seller, Atlanta, GA
Thu Jan 2, 2014
You and you Wife can buy a home with a tax lien. If you are making payments on the lien and have been current for at least one year. You can get loan, a FHA loan as well. You have to talk to your lender about getting it rated. Meaning, get the IRS to confirm it has been current and the lender should know what to do from there.
1 vote
David Herren, Agent, Atlanta, GA
Tue Mar 5, 2013
Props to Rodney for posting another well reasoned, helpful answer.

You sound pretty steamed about this. You also did not say whether this is a legitimate debt or a case of mistaken identity. Assuming it is your debt, and even if it is not, unless you want a lengthy fight, contact the IRS and deal with this head on. Get your fact and documentation in order, be calm, polite, and pick up the phone.

And remember that thing our mothers used to say about a spoon full of sugar, or honey, or whatever it was, it goes triple for government officials. Who ever you get at the IRS, they did not cause your problem, but they can sure make it worse. Go in with the right attitude, and they might just help you solve your poblem.


Dave Herren
Best Atlanta Properties
1 vote
Jane Teschner, Renter, New York, NY
Sat Jun 17, 2017
You can file bankruptcy on old unpaid taxes 3 years after the date you filed the taxes.
0 votes
Kathy Burgre…, Home Owner, Westchester, NY
Sat Jan 21, 2017
ALL of the answers below left out some important critical information:

1. For ALL purchase and refinance loans, tax authorities (IRS, state) are in 1st position meaning if the owner / buyer is delinquent with payments on their tax liens only, the tax authorities can foreclose on the property and when the home sells, the tax authorities collect what is owed them. If there is still a balance owed on the mortgage loan, the profits from the sale of the house go to the tax authorities - not the lender. Therefore the lender is out the money. The lender is in 2nd position and cannot collect anything.

2. When it comes to property taxes, owners can pay property taxes separate and it does not have to be included in escrow. However, lenders don't trust that buyers will pay property taxes on time, therefore, lenders make it easy for themselves to include property taxes in the mortgage payments so this way the taxes are paid on time. If the taxes ever increase, your escrow payments will increase. If you cannot afford increased escrow payments, your lender will foreclose on your home and they will be in 1st position - not your county because of unpaid property taxes.

3. Lenders are independent contractors and self employed. Therefore, they can pick and choose which buyers to give loans to. If you have tax liens with the IRS or your state, this tells lenders they don't have to give you a loan if they don't want to. It has nothing to do with requirements or IRS rules. It has to do with their business model. Lenders weigh the risks of giving you a loan. If they think it's too risky, the answer is NO. Lenders need to make a profit. Giving a loan to a buyer that has tax liens spells lousy deal for the lender. This is discrimination and it's legal to discriminate if a buyer has tax liens.
0 votes
Jfjdhahh, Home Buyer, Atlanta, GA
Thu Jan 12, 2017
I have a 200k home owned outright with a 30k irs tax and 12k state tax lien on it. Is there anyway to get equity out of it ?
0 votes
Boyd969, Home Buyer, Bakersfield, CA
Mon May 16, 2016
we want to refinance so we can get off from under this interest loan we have a tax lien it not much it couldn't be no more than 8,000 how can I refinance with a tax lien. This loan has been pass to one mortgage to another what can we do
0 votes
Boyd969, You can accomplish this with a payment plan and a FHA loan.

Joe Piacentini
Selig & Associates
Flag Wed May 18, 2016
Samira2424, Home Buyer, New York, NY
Thu Apr 7, 2016
The irs has a payment plan program where you sign up for automatic payments in order to repay what you owe, and after the 3rd on time payment they will delete it from your credit report you can research this online or hire a professional like myself to assist.
0 votes
Manuel Corra…, Agent, Goodyear, AZ
Sun Aug 3, 2014
anyone know of a GOOD tax attorney in arizona
0 votes
Lynel Adams, , Gainesville, GA
Wed Mar 6, 2013
I agree with Rodney, he is correct, the lien with the IRS will attach itself to "the collateral/title" of real property. Therefore, there are not any lenders, banks, that I am aware of that will allow this to be a matter of record at the same time trying to buy a home.

Thank you for the opportunity,

Lynel Adams
Sr. Mortgage Loan Officer
Silverton Mortgage Specialist
NMLS 359696
0 votes
You can agree with Rodney all you want, but you and Rodney are both incorrect.
Flag Thu Aug 4, 2016
This is not true. It happens all of the time - especially since the federal lien is NOT in first position - but typically in second position. As the daughter of a long time broker I can tell you from experience that many times this will not prohibit you. This happens all of the time where one spouse has baggage because of a miscalculated deal that happened prior to their marriage - and then a lien is placed "during" the marriage. Many lenders just need paperwork showing you are working through it. And NO - the lien does not need to be "cleared" at closing. However, any "judgements" you have against you - do have to be cleared.
Flag Wed May 14, 2014
Kawain Payne, Agent, Seal Beach, CA
Mon Mar 4, 2013
There is sadly no way AROUND an IRS lien. It has to be dealt with head on. You will need an attorney who specializng in tax law.

You will most likely not be able to secure a mortgage loan with an IRS lien.

Best of Luck to you

Kawain Payne, Realtor
0 votes
So many "experts", so little true information.
Flag Thu Aug 4, 2016
Bruce Ailion, Agent, Marietta, GA
Mon Mar 4, 2013
You should consult an attorney specializing in IRS issues. Don't go cheap. Hire someone good. Till IRS is satisfied, any equity you put into a house belongs to IRS and that does not make your lender feel you have any skin in the game. If you have money for a down payment consider an offer in compromise. This is not going to go away!

Bruce Ailion,
RE/MAX Greater Atlanta
An Atlanta Real Estate Expert Serving Clients Since 1979
RE/MAX Hall of Fame – REALTOR Phoenix Award
Certified Residential Specialist
Certified Real Estate Broker
Accredited Buyers Agent
MS Real Estate and Urban Affairs
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203K Certified Specialist
2050 Roswell Road
Marietta GA 30062
404-978-2281 Direct
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678-760-6266 Buyer’s Agent Adam
770-973-9700 Office
0 votes
One note: we have a substantial IRS lien and there's no way to pay it off in one lump sum (our CFO of the business we own decided paying our payroll taxes wasn't a top priority and we get to pay the penalty for not being attentive to what he was doing). Now we are saddled with a $100k lien against us. The one thing everyone needs to understand is that if you do an "offer in compromise" it is viewed the same as a bankruptcy and stays on your credit for 10 years as such. Instead, we have a payment plan and any time we have more than usual money come in we add to the payment to try to knock the overall amount down. It indeed does not go away and we don't harbor resentment for having to pay it. We owed it all along we just didn't know it wasn't getting paid. Now we have to suffer the consequences of not being attentive to our bottom line and trusting someone else far too much with our finances.
Flag Sat Apr 23, 2016
Cheryl Taylor, Agent, Atlanta, GA
Mon Mar 4, 2013
Sorry, unfortuantely no one will give you a loan with a tax lien. You are going to have to work that out first. No bank is giving you a loan with a debt that can be tied to their property. Banks will even have buyers pay some debt/collections off.

Work on getting your lien down and set up a payment plan to pay it off. Also, work on saving some money for your down payment while you wait for your lien to be paid off.

Good luck

Cheryl Taylor
Solid Source Realty
0 votes
This is just not the case, you can get a mortgage with a tax lien, you have to set up payments with the IRS and be on time paying them for a certain amount of time(depending on the lender 4 to 12 months)
Flag Wed Oct 12, 2016
This is just not the case, you can get a mortgage with a tax lien, you have to set up payments with the IRS and be on time paying them for a certain amount of time(depending on the lender 4 to 12 months)
Flag Wed Oct 12, 2016
This is just not the case, you can get a mortgage with a tax lien, you have to set up payments with the IRS and be on time paying them for a certain amount of time(depending on the lender 4 to 12 months)
Flag Wed Oct 12, 2016
This is just not the case, you can get a mortgage with a tax lien, you have to set up payments with the IRS and be on time paying them for a certain amount of time(depending on the lender 4 to 12 months)
Flag Wed Oct 12, 2016
So many "experts", so little valid information.
Flag Thu Aug 4, 2016
I got a mortgage with a $30,000 lien. The lawyer spoke with the IRS and they agreed to whatever.. Now I am trying to refinance and am not sure its gonna happen again.
Flag Tue Aug 2, 2016
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