Buying a Home in McKinney with Unpaid Taxes? Your Top Realtor Explains

Hey everyone! Brandon Scribner here, your trusted top realtor in McKinney and Frisco, TX. I get a lot of questions from hopeful homebuyers, and one that pops up more often than you might think is: 'Can I still purchase a house if I haven't paid my taxes yet?' It’s a great question, and one that often causes unnecessary stress. Let's tackle it head-on.

First off, take a deep breath. The short answer is: possibly, yes! It's not an automatic deal-breaker, but it certainly requires careful navigation and transparency. As someone who offers comprehensive Home Buying Assistance, I've helped countless first time home buyers and seasoned purchasers navigate all sorts of financial scenarios, and this one is pretty common.

When you apply for a mortgage, lenders are primarily looking at your overall financial picture to assess your risk. They want to see consistent income, a solid credit history, and a manageable debt-to-income ratio (DTI). While your tax situation is part of that picture, "haven't paid my taxes yet" can mean a few different things, and each has a different impact.

Scenario 1: You haven't filed your taxes yet, but you expect a refund or owe a small amount. This is generally the least problematic. Lenders usually require your most recent two years of tax returns to verify income. If you simply haven't filed *this year's* taxes but are up-to-date on previous years and expect a refund, it might not significantly hold up the process, especially if you can provide other proof of income like W-2s or pay stubs. However, it's always best to get them filed as soon as possible. If you owe a small amount, demonstrating you have the funds to pay it or are setting up a payment plan shows responsibility.

Scenario 2: You owe back taxes, but you're on a payment plan with the IRS. This is more complex, but still potentially workable. If you have an established, consistent payment plan with the IRS, lenders will typically count that monthly payment as part of your overall debt when calculating your DTI. As long as your DTI remains within their acceptable limits, and you've been consistent with your payments, you might still qualify. Transparency with your lender here is absolutely crucial. They'll want to see documentation of the payment agreement.

Scenario 3: You owe significant back taxes with no payment plan, or you have a tax lien. This is where things get tricky. A significant amount of unpaid back taxes without a plan, or worse, an active federal tax lien against your property (or potential property), is a major red flag for lenders. A tax lien means the government has a legal claim to your assets, including any property you own or might purchase, until the debt is satisfied. In most cases, a lender will require any tax liens to be fully satisfied or released before they will approve a mortgage. They don't want to be in a position where the government has a superior claim to the property.

My advice as Brandon Scribner, your dedicated top realtor in McKinney, is always to address your tax situation proactively. Before you even start seriously looking at homes or applying for a mortgage, consult with a qualified tax professional. They can help you understand your options, whether it's filing quickly, setting up a payment plan, or resolving a lien. Having a clear plan in place will make your mortgage application process much smoother and increase your chances of approval. This proactive approach not only eases your stress but also presents you as a more credible applicant to lenders, showcasing your financial responsibility.

Lenders value stability and responsibility. While a past tax issue isn't insurmountable, demonstrating that you're actively managing it shows you're a reliable borrower. I've seen situations where clients thought their dreams of homeownership were crushed due to tax concerns, only to find a path forward with proper guidance. As an Accredited Buyer Representative, part of my role is connecting you with the right resources, whether that's a mortgage broker who understands unique situations or a tax advisor. My expertise in assisting first time home buyers often involves navigating these very questions, ensuring you feel supported every step of the way.

Navigating the real estate market can be complex, especially when you have personal financial questions. That's why having an experienced professional by your side is invaluable. If you're wondering about your specific situation or just starting to think about buying a home in Frisco, McKinney, or anywhere in the Dallas-Fort Worth area, don't hesitate to reach out. I offer a Free Consultation to discuss your goals and help you create a roadmap to homeownership. Let's make your homeownership dreams a reality, regardless of the bumps along the way!