Short answer
Often, yes. For conventional loans, Fannie Mae allows an IRS installment agreement, approved or applied for, when there's no Notice of Federal Tax Lien recorded against you in the county where the home is. The lender needs the agreement or application, proof you're current on payments, and counts the monthly payment in your debts. If a federal tax lien has been recorded there, the balance generally has to be paid off at or before closing.
What will the lender ask for?
- For an approved plan: the IRS installment agreement showing the monthly payment and total owed, and proof you're current, such as your latest IRS payment reminder
- For a plan waiting on approval: a copy of your application with the proposed payment and total owed
Your tax returns will also show whether you owe for recent years, so bring up any balance early.
How does the payment affect what I can afford?
Unless you pay the balance in full, the monthly installment counts as a debt when the lender figures your debt-to-income ratio, the same way a car payment would. That can lower the price you qualify for, so it's worth comparing paying the balance down before you apply.
What if there's a federal tax lien?
A recorded federal tax lien is a claim against your property, and lenders need a clear first lien on the home you're buying. If the IRS has recorded a lien in the county where the home is, Fannie Mae generally requires the balance to be paid in full at or before closing. Other programs, such as FHA and VA, have their own rules, so ask before you assume you're out of options. For FHA, see federal debt and FHA loans.
What about New Hampshire taxes?
New Hampshire has no tax on wages, but business owners can owe state business taxes, and property owners can owe back property taxes, which become liens. Unpaid property taxes on a home you're selling are paid from the sale at closing. See does NH have an income tax.
What should I do first?
Get your IRS account transcript and any agreement in hand, then talk with Tom about timing. If you're self-employed and owe from a recent year, see self-employed mortgages in NH and what to do after a denial.
Sources
- Fannie Mae Selling Guide B3-6-05, Monthly Debt Obligations (federal income tax installment agreements)
- Fannie Mae Selling Guide B3-6-07, Debts Paid Off At or Prior to Closing
Checked November 2, 2026. Rules and dates change, so confirm current details before you rely on them.
General information only, not tax or legal advice. Program availability, eligibility and terms vary by lender and are subject to change and to underwriting approval. Not a commitment to lend.