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Can you Qualify for a USDA Loan with an IRS Tax Lien?

October 23rd, 2015 by Sean Stephens

Can you qualify for a USDA loan with an IRS tax lien?

Alright, I know what many of you may be thinking – that an IRS tax lien will automatically put a stop to a USDA loan process. Thankfully though, USDA guidelines offer qualifying flexibility in these type of situations. In today’s short video, we will discuss the details on how to qualify for a USDA loan with an IRS tax lien.



Just to be clear, today’s topic deals specifically with IRS Federal Tax judgments and USDA loan qualifying and is not tax advice. For any IRS related questions, please consult with your tax professional.

USDA loan with an IRS tax lienIn these circumstances, USDA approved lenders are not authorized to make exceptions in the case of an applicant with a delinquency on a Federal debt, or with an outstanding judgment obtained by the United States in Federal court – except for the U.S. Tax Court.

In the case of IRS tax judgments, qualifying for a USDA loan can be possible with evidence of a payment arrangement.

It is up to the approved USDA lender to consider what would be an appropriate repayment period length, and with our guidelines we would require at the minimum 12 months of payment history. Please remember per USDA guidelines, if there are any delinquent payments during the repayment period then the applicant will be ineligible.

It is important to have the following documents prepared:USDA loan with an IRS tax lien

  • IRS documents showing payment plan terms
    (Amount owed, monthly payment, etc.)
  • Proof of payment history
    (Cancelled checks, auto debits from bank account, etc.)

Qualifying for a USDA loan with an IRS tax lien can be possible, but remember that additional steps will be required.

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