Can I Get A Mortgage With Unfiled Taxes

For many people, owning a home is a significant goal and turning point in their lives. But can you get a mortgage with unpaid taxes?.

I’ll respond to that query and discuss whether you ought to apply for a mortgage while having unpaid taxes hanging over your head in today’s article.

Can I get a mortgage with unpaid taxes?

Yes, you can sometimes get a mortgage even if you have unpaid tax debt, is the quick response. Of course, if you pay off your tax debt before applying, your chances will be better.

Please remember to mention this in your loan application if you have a deal with the IRS Debt Forgiveness Program. In addition, the lender might request documentation of any IRS repayment plans you have in place. Your chances of obtaining a mortgage with unpaid taxes can be increased by demonstrating that you already have a strategy in place and that you have been following it consistently.

Should I apply for a mortgage with unpaid taxes?

Even though it may be possible for you to obtain a home loan, I believe it is not a good idea to do so if you have unpaid taxes. Why? Because the bank or lender will consider that when determining the conditions of your mortgage, just like when you owe any debt. Unpaid taxes will lower your chances of obtaining a favorable interest rate, which will result in you paying more than necessary for your home.

Can I get a mortgage with unfiled taxes?

If you haven’t filed your taxes in a year or more, it will be much more difficult, if not impossible, to get approved for a mortgage. This is because when deciding whether or not to approve your mortgage, lenders consider your income tax returns from at least the last two years. They examine and verify your income and debt using those tax documents.

The process for filing taxes for previous years is simple if you need to do it before applying for a mortgage. Just ask a CPA for help if you need direction or if you need help. Remember that filing is the first step you must take in order to apply for the IRS Debt Forgiveness Program if you’ve been delaying because you believe you’ll owe taxes.

Can I get a new mortgage with a tax lien on my other property or income?

Whether or not you’ll be able to get a new mortgage when the IRS has placed a tax lien on another property or your assets will boil down to whether or not you’re on a payment plan with the IRS and have consistently been making your payments for a certain period of time (usually between three and 12 months). The lender may also ask that you file an Application for Certificate of Subordination of Federal Tax Lien with the IRS. If the IRS approves this application, they are basically saying that if you default on your new mortgage and the mortgage company places a lien on your property, that lien will take precedence over the IRS’ lien in terms of repayment.

Even if you make every effort to pay off your tax lien, most lenders won’t be ready or willing to approve a new mortgage for you until the lien has been completely removed.

Additionally, similar to when someone owes back taxes, if you apply for a new mortgage while your assets are still subject to a tax lien, the interest rate and terms of the loan will be significantly worse than if you wait until your debt is settled and your lien is lifted.

Can I get a mortgage with unpaid state taxes?

The same rules that apply to unpaid federal taxes and liens also apply to lenders’ treatment of unpaid state taxes and liens. Before submitting an application for a mortgage, it is in your best interest to pay any back taxes you owe at the federal, state, and local levels.

The bottom line is that while it’s possible to obtain a mortgage despite unpaid taxes, doing so is typically not advantageous from a financial standpoint. Instead, here are the steps I suggest:

If you need help filing your previous year(s) tax returns, work with a CPA who can get you on the right track. Delaying this any longer will only lead to more debt and worry.

Check to see if you can apply and qualify for the IRS Debt Forgiveness Program so that you can start to put your tax debt behind you. Your accountant will be able to help you with this step as well.

Pay off all back taxes and have all tax liens removed from your assets before applying for a mortgage. You should make sure you have a clean slate with the IRS as well as state and local tax authorities.

FAQ

Can I get a mortgage if I have not filed taxes?

Lenders use your tax returns to verify your income. They also look at your W2s or other income statements. It’s a warning sign that you might not be trustworthy enough to pay your mortgage if you don’t have verifiable tax returns. Many lenders, as mentioned above, will not even process a mortgage without a tax return.

Do mortgage lenders always need tax returns?

Proof of Income for a Mortgage Loan You must submit two years’ worth of tax returns and W-2 forms, as well as your most recent pay stubs. Lenders don’t actually require that you be at the same job for two full years, despite the fact that you must provide two years of tax returns.

Do you need 2 years of tax returns for a mortgage?

To confirm that your self-employment income is steady and reliable, lenders typically require at least a two-year history of tax returns. Thankfully, some borrowers can only use one year’s worth of tax returns to meet the requirements for a mortgage.