Last updated: April 29, 2026 · Verified against IRS, FHA, VA, and Fannie Mae guidelines
Can I Get a Mortgage with Tax Liens? 2026 Complete Approval Guide
YES, you can get a mortgage with tax liens in 2026. FHA and VA loans allow tax liens if you have an IRS payment plan with 3+ months of on-time payments. Conventional loans require lien subordination or full payoff. This complete guide covers federal vs state liens, the IRS subordination process, payment plan setup, and 4 proven approval strategies with real examples.
FHA Requirement
3 Payments
Subordination Time
30-45 Days
IRS Setup Fee
$31-$130
Success Rate
80%+
Quick Answer: Can I Get a Mortgage with Tax Liens?
YES, you can get a mortgage with tax liens. FHA loans allow tax liens if you have an IRS payment plan with 3+ months of on-time payments. VA loans have similar requirements. Conventional loans require lien subordination (IRS agrees to be paid after mortgage) or full payoff. Key fact: Tax liens don't appear on credit reports since 2018, but lenders discover them through title searches. Best strategy: Set up IRS payment plan ($31-$130 fee), make 3 payments, apply for FHA loan. Compare lenders who specialize in tax lien approvals for the fastest path to homeownership.
Loan Type Requirements for Tax Liens (2026)
FHA Loans
Requirement: IRS payment plan
Payments needed: 3+ consecutive on-time
Subordination: NOT required
Payoff: NOT required
Min credit: 580
✓ Easiest option for tax liens
VA Loans
Requirement: IRS payment plan
Payments needed: 3+ consecutive on-time
Subordination: NOT required
Payoff: NOT required
Min credit: 620 (lender requirement)
✓ Veterans only, very flexible
Conventional
Requirement: Subordination OR payoff
Subordination time: 30-45 days
Payment plan: Required for subordination
Payoff option: Pay in full before closing
Min credit: 620
⚠️ More complex process
Federal vs State Tax Liens: Key Differences
| Feature | Federal (IRS) | State Tax Liens |
|---|---|---|
| Subordination Process | Streamlined (Form 14134) | Varies by state, often complex |
| Subordination Success Rate | 80%+ with payment plan | 30-60% (some states refuse) |
| Payment Plan Acceptance | Widely accepted by lenders | Case-by-case, less common |
| FHA/VA Approval | Yes, with 3+ payments | Harder, often requires payoff |
| Processing Time | 30-45 days | 45-90 days (or longer) |
| Online Setup | Yes (IRS.gov) | Varies by state |
| Withdrawal Option | Yes (with payment plan) | Rare |
| Best Strategy | Payment plan + subordination | Pay in full if possible |
Bottom line: Federal tax liens are MUCH easier to work with for mortgage approval. If you have both federal and state liens, prioritize resolving state liens first (pay off or negotiate), then use payment plan for federal liens.
Get Pre-Approved with Tax Liens Today
Our lender partners specialize in approving buyers with tax liens. They'll guide you through the IRS payment plan setup and subordination process.
How to Set Up an IRS Payment Plan (Step-by-Step)
Go to IRS.gov/paymentplan
2 minutesVisit the IRS Online Payment Agreement application. You'll need: Social Security number, filing status, tax return info from last 2 years. No phone call needed - entire process is online.
Choose Installment Agreement Type
3 minutesShort-term (120 days or less): $0 setup fee, pay in full within 120 days. Long-term (over 120 days): $31 setup fee (direct debit) or $130 (other payment methods). Most people choose long-term for mortgage approval.
Set Monthly Payment Amount
2 minutesIRS calculates minimum payment based on amount owed. You can pay more to finish faster. Example: $30,000 owed = $250-$500/month minimum. Choose amount that fits your budget - lenders just need 3 on-time payments.
Submit Application
1 minuteReview and submit. If you owe $50,000 or less, you're automatically approved. If you owe more, IRS reviews within 30 days. You'll receive confirmation letter by mail in 7-10 days.
Make 3 Consecutive Payments
3 monthsSet up automatic payments to avoid missing any. After 3 on-time payments, you can apply for FHA/VA mortgage. Save payment confirmations to show lender. This is the key requirement for mortgage approval.
Request Payment Plan Letter
1 weekCall IRS at 1-800-829-1040 and request a letter confirming your payment plan and payment history. Or download from IRS.gov account. Provide this to your mortgage lender as proof of payment plan.
💡 Pro Tip: Set up direct debit for automatic payments. This ensures you never miss a payment (which would reset your 3-month requirement) and saves you $99 in setup fees ($31 vs $130). Get pre-approved after your 3rd payment to start house hunting immediately.
4 Strategies to Get Approved with Tax Liens
Strategy #1: FHA Loan with IRS Payment Plan (Easiest)
Best for: Federal tax liens, first-time buyers, low down payment
Requirements: IRS payment plan + 3 on-time payments, 580+ credit score, 3.5% down
Timeline: 3-4 months (payment plan setup + 3 payments + mortgage approval)
Cost: $31-$130 IRS setup fee + 3 monthly payments
Success rate: 90%+ if you meet requirements
✓ No subordination needed, no payoff required - just payment plan
Strategy #2: Conventional with Subordination
Best for: Buyers with 20% down, good credit, want to avoid PMI
Requirements: IRS payment plan, Form 14134 subordination, 620+ credit, 20% down
Timeline: 4-5 months (payment plan + subordination approval 30-45 days + mortgage)
Cost: $0 for subordination (IRS doesn\'t charge), payment plan setup $31-$130
Success rate: 80% with payment plan and equity
✓ Best rates, no PMI, but requires subordination process
Strategy #3: Pay Off Lien Before Closing
Best for: Small liens (under $10,000), buyers with cash reserves
Requirements: Pay lien in full, wait 30 days for release, then apply for any loan type
Timeline: 1-2 months (payoff + release + mortgage approval)
Cost: Full lien amount
Success rate: 100% once lien is released
✓ Fastest approval, works with all loan types, but requires cash
Strategy #4: Offer in Compromise (OIC) + Mortgage
Best for: Large liens ($50K+), financial hardship, can\'t afford full payment
Requirements: Submit OIC to IRS, settle for less than owed (typically 10-30%), wait for acceptance
Timeline: 6-12 months (OIC approval) + 30 days (lien release) + mortgage approval
Cost: Settlement amount (often 10-30% of total owed) + $205 application fee
Success rate: 40% OIC acceptance rate, then 100% mortgage approval after release
⚠️ Longest timeline but can save tens of thousands on large liens
Real Examples: Buyers Approved with Tax Liens
Example 1: Michael - $28,000 IRS Lien, FHA Approved
Situation:
- • Federal tax lien: $28,000
- • Credit score: 595
- • Down payment: 3.5% ($10,500 on $300K home)
Strategy:
- • Set up IRS payment plan: $350/month
- • Made 3 on-time payments
- • Applied for FHA loan
- • Timeline: 4 months total
✓ Result: FHA approved, 6.75% rate, no subordination needed
Example 2: Lisa - $45,000 IRS Lien, Conventional with Subordination
Situation:
- • Federal tax lien: $45,000
- • Credit score: 680
- • Down payment: 20% ($80,000 on $400K home)
Strategy:
- • Set up IRS payment plan: $500/month
- • Filed Form 14134 for subordination
- • IRS approved in 38 days
- • Timeline: 5 months total
✓ Result: Conventional approved, 6.5% rate, no PMI, subordination successful
Example 3: James - $8,500 State Lien, Paid Off
Situation:
- • State tax lien (California): $8,500
- • Credit score: 640
- • Down payment: 5% ($12,500 on $250K home)
Strategy:
- • Paid lien in full: $8,500
- • Waited 30 days for release
- • Applied for conventional loan
- • Timeline: 2 months total
✓ Result: Conventional approved, 6.85% rate, fastest path for state liens
Frequently Asked Questions
Can I get a mortgage with a tax lien on my credit?
Yes, you can get a mortgage with tax liens in 2026. FHA and VA loans allow tax liens if you have an IRS payment plan (3+ months of on-time payments). Conventional loans require either full payoff or lien subordination (IRS agrees to be paid after the mortgage). Federal tax liens are easier to work with than state liens. Key: Tax liens do NOT appear on credit reports anymore (since 2018), but lenders discover them through title searches.
What is the difference between federal and state tax liens?
Federal tax liens (IRS): Easier to subordinate, IRS has streamlined process, payment plans widely accepted by lenders, can be released with $25K+ owed if on payment plan. State tax liens: Harder to subordinate, each state has different rules, some states refuse subordination, must often be paid in full. Example: California accepts subordination, Texas requires full payoff. Federal liens are much easier to work with for mortgage approval.
How do I get an IRS payment plan for mortgage approval?
IRS payment plan process: 1) Apply online at IRS.gov/paymentplan (takes 10 minutes), 2) Choose installment agreement ($50K or less = automatic approval), 3) Make 3 consecutive on-time payments before applying for mortgage, 4) Get letter from IRS confirming payment plan, 5) Provide to lender as proof. Cost: $31 setup fee (direct debit) or $130 (other methods). Monthly payment: Based on amount owed, typically $100-$500/month. Timeline: 3-6 months from setup to mortgage approval.
What is tax lien subordination and how does it work?
Subordination: IRS agrees to let your mortgage be paid first if you default (instead of IRS being first in line). Why needed: Tax liens have priority over mortgages. Lenders won't approve unless IRS subordinates. Process: 1) Submit IRS Form 14134 (Application for Certificate of Subordination), 2) Provide purchase contract, loan estimate, proof of equity, 3) IRS reviews (30-45 days), 4) IRS issues subordination certificate, 5) Lender approves mortgage. Success rate: 80%+ if you have equity and payment plan. Cost: $0 (IRS doesn't charge).
Do tax liens show up on credit reports?
No, tax liens do NOT appear on credit reports since April 2018 (removed by Equifax, Experian, TransUnion). How lenders find them: Title search during mortgage process, Public records search, County recorder office, IRS lien database. Impact: Tax liens don't directly lower your credit score, but lenders still discover them and require resolution. You can't hide tax liens from mortgage lenders even though they're not on your credit report.
Can I get an FHA loan with a tax lien?
Yes, FHA allows tax liens with these requirements: Must have IRS payment plan in place, Must make 3+ consecutive on-time payments, Payment plan must be current (no missed payments), Lien does NOT need to be paid off or subordinated (FHA is most lenient). Example: $30,000 IRS debt, $300/month payment plan, 3 months of payments = FHA approved. Conventional requires subordination or payoff, but FHA only needs payment plan. This makes FHA the best option for tax liens.
How long does it take to remove a tax lien?
Tax lien removal timeline: Pay in full: Lien released in 30 days, Payment plan completion: Lien released when fully paid (can take years), Offer in Compromise: 6-12 months to settle + 30 days to release, Withdrawal: IRS removes lien from public records (requires payment plan + 3 payments). Fastest option: Pay in full if possible. Most common: Payment plan + subordination for mortgage approval (don't wait for full payoff). Note: Even after payoff, lien stays in public records for 7 years but is marked "released" which doesn't block mortgage approval.
Sources & Official Data
All data verified against official sources as of April 29, 2026:
- • IRS Publication 594 — Understanding the Collection Process (tax liens, payment plans)
- • IRS Form 14134 — Application for Certificate of Subordination of Federal Tax Lien
- • FHA Handbook 4000.1 — Tax lien requirements (Section II.A.4.d.ii)
- • VA Lender's Handbook — Tax lien guidelines (Chapter 4)
- • Fannie Mae Selling Guide — Conventional loan tax lien requirements (B3-6-06)
Related Resources
Ready to Buy a House with Tax Liens?
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