If you have an IRS tax on your income or assets, you'll have a hard time getting approved for a mortgage. Tax liens don't appear on credit reports, but they are likely to appear when your lender seeks a lien. Lenders may view unpaid taxes as an indicator that the mortgage will also fall behind. Then, your lender will add these documents to your file and contact the IRS to ask you to subordinate your tax lien and prioritize mortgage debt first.
If there is a federal tax levy on your home, you must comply with the tax before you can sell or refinance your home, according to the IRS. The lender will then verify that the debt is paid in full and that the IRS has released any liens in your name. A tax, on the other hand, occurs when the IRS forecloses your property and sells it to recover your unpaid taxes. If the IRS agrees, then you'll be back on track to get approved, even if you buy in the same county where your current tax is.
In terms of debt, Richard owes monthly payments on his car loan, his student loans and now his repayment agreement with the IRS. Talk to the IRS to get the payment amount of the total debt owed, and then pay the IRS directly to resolve the debt in full. Once you understand your options for managing your IRS debt, it's time to start working on a plan. If the IRS has filed a tax lien against you in the county where the property in question is located, you MUST pay off all of the federal tax debt and have the lien released before you apply for a mortgage.
The IRS doesn't believe taxpayers' words and will contact mortgage companies for information. Fannie Mae's guidelines on tax debt from the IRS allow you to get a mortgage if you have an installment agreement to pay your back taxes. Generally, returning the money to the IRS is a higher priority for the borrower than paying their mortgage debt to the lender. Buying a home while you owe money to the IRS may seem like an insurmountable obstacle, but tax debt can't stop you from achieving your dream of owning a home.
Getting a mortgage approved in this situation has less to do with the IRS and more to do with the individual lender.