Is it ok if I have a payment plan with the IRS?

Wondering if it’s okay to have a payment plan with the IRS while applying for a mortgage? If you’re looking into a Fannie Mae or Federal National Mortgage Association (FNMA) IRS payment plan, you’re not alone.

These days, underwriters take a pretty close look at your finances — especially if you owe taxes. That’s why it’s smart to let your lender know about any IRS payment plans early on in the mortgage process. If you don’t, it could hurt your chances of getting approved. Whether the plan is acceptable, and how it affects your debt ratio, depends on the type of loan you’re going for. Here’s how it breaks down:

• Fannie Mae (Conventional): IRS payment plans are allowed, but the monthly payment must be included in your debt-to-income (DTI) ratio.
• Freddie Mac (Conventional): Payment plans are permitted, with the monthly amount factored into your DTI ratio.
• FHA: You can have an IRS payment plan, but the monthly payment will be counted in your DTI calculation.
• USDA: IRS payment plans are acceptable, but the payment must be included in your DTI ratio.
• VA: Payment plans with the IRS are allowed, as long as the monthly payment is considered in your DTI ratio.

Have specific questions? The team at Blue Water Mortgage is happy to help. Get in touch today.

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