Mortgage With A Judgment
A court judgment does not have to end your home search. Many programs want it paid off at or before closing, and FHA can accept a payment agreement with the creditor instead.
What you may need
Each item below is a rule of Fannie Mae, FHA, or at least one other program we offer.
- On Fannie Mae, proof open judgments are paid off at or before closing, along with proof of the funds used.
- On FHA, the judgment resolved or paid off at or before closing.
- On FHA, if you are not paying it off, a valid agreement with the creditor, at least three months of timely payments under it, and a judgment that will not take priority over the FHA-insured mortgage.
- On FHA, a subordination agreement for any lien already on title that is not paid off.
- On FHA, the payment in the agreement counted in your monthly debts.
- On at least one jumbo program, liens that affect title satisfied before closing.
Payoff at closing works
FHA payment agreements
No prepaying to catch up
VA programs differ
Title liens come first
Federal debts are separate
How A Judgment Affects A Mortgage
It depends on the loan program and whether you pay the judgment off or set up an agreement with the creditor.
On a Fannie Mae loan, open judgments and liens in the public records section of your credit report must be paid off at or before closing, and the loan file must show the payoff and the funds used. FHA also wants court-ordered judgments resolved or paid off at or before closing.
FHA considers a judgment resolved if you have a valid agreement with the creditor to make regular payments, you have made timely payments for at least three months, and the judgment will not take priority over the FHA-insured mortgage. You cannot prepay to reach the three months. Owe the IRS instead? See our IRS payment plan mortgage page.
At least one VA program accepts a repayment plan with a history of timely payments, while another wants the judgment resolved, or paid off and released, at or before closing. Federal debt is checked separately: FHA cannot process an application from a borrower with delinquent federal non-tax debt, including deficiency judgments.
Why choose Saxton when you have a judgment
For borrowers with a court judgment on their record who want to know whether to pay it off or set up an agreement before buying.
Payoff At Closing Works
Fannie Mae and FHA allow open judgments to be paid off at or before closing, with proof of the payoff in the loan file.
FHA Payment Agreements
FHA treats a judgment as resolved with a valid agreement with the creditor and at least three months of timely payments, as long as it will not take priority over the FHA-insured mortgage.
No Prepaying To Catch Up
On FHA, you cannot prepay scheduled payments on the agreement to meet the three-month minimum.
VA Programs Differ
At least one VA program accepts a repayment plan with a history of timely payments, and at least one other wants the judgment resolved, or paid off and released, at or before closing.
Title Liens Come First
At least one jumbo program requires liens that affect title to be satisfied before closing, and FHA needs a subordination agreement for any lien on title that is not paid off.
Federal Debts Are Separate
FHA cannot process a loan for a borrower with delinquent federal non-tax debt, including deficiency judgments, and at least one VA program will not approve a borrower with a judgment lien for a government debt until it is paid or satisfied.
Hear From Homeowners Like You
Frequently Asked Questions
Straight answers about judgments and home loans.
Yes, in many cases. Many programs want it paid off at or before closing, and FHA can accept a payment agreement with the creditor instead.
On Fannie Mae, it must be paid off at or before closing. On FHA, a judgment can also be resolved with a valid agreement and at least three months of timely payments, as long as it will not take priority over the FHA-insured mortgage.
Not on FHA. You cannot prepay scheduled payments to meet the three-month minimum.
Yes. On FHA, the payment in the agreement is included in your monthly liabilities and debt.
On FHA, judgments of a non-borrowing spouse in a community property state must be resolved or paid in full, except obligations excluded by state law.
Not on FHA, which does not allow nonprofit entities to give gifts to pay off judgments, and at least one VA program has the same rule.
At least one jumbo program does not allow a borrower who is currently in a lawsuit. Tell us about it up front so we can look at the programs that fit.
Find out what you qualify for
Tell us about the judgment and what you want to buy, and we will show you the programs that fit.
Get Pre-QualifiedLoan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Draw requirements and variable rate terms apply. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.