Tax Liens Guides

How To Get a HELOC With a Tax Lien on Your Home

If you receive notice that you owe taxes at the federal or state level, you may not have the money available to pay them right away. If so, the taxing entity may place a lien on your property, including your home. Can you get a HELOC with a tax lien on your house? While it is possible to obtain a home equity line of credit in a situation like this, it can be challenging.

Understanding Property Liens

A lien on your property is any legal claim another entity makes on the property because of a debt you owe. When a lien is present, you may have restrictions on what you can do with the property.

Liens on property are common, but they don’t always involve unpaid taxes. A bank issues a lien when you obtain a mortgage, for example. You also may receive a lien if you have an unpaid electric bill or owe child support payments.

Understanding the intricacies of liens can be difficult without access to legal knowledge. While working with a lawyer can help to bridge this gap, finding representation isn’t always easy or affordable. Thankfully, there are options for individuals in this position. An example is JusticeDirect and the CBA’s new initiative designed to provide individuals who can’t afford or secure representation access to legal information and documentation.

Some financial institutions simply refuse to issue HELOCs when the property has a lien against it. This means you may lose your HELOC eligibility with tax or other liens on the property. You may have to find a way to pay the tax lien or successfully request an offer in compromise from the taxing entity before obtaining a HELOC.

Before proceeding with the HELOC application, you should understand the steps you need to take to obtain a HELOC despite a tax or another lien.

Options To Get a HELOC Loan With a Tax Lien

A bank does not have to give you HELOC approval with tax liens in place on your property. You must take a few steps to ensure your tax lien and HELOC application can co-exist. Here are some HELOC options with a tax lien that you can try.


You can ask the taxing entity to withdraw or subordinate the lien, giving the bank a reason to award your HELOC. However, you may have to agree to use the HELOC proceeds to pay your tax bill.

Home Valuation

If your home’s valuation is much higher than the amount you owe in taxes, perhaps you can get a HELOC with a tax lien. The lending institution may decide that the property’s value is high enough when compared to the lien to reduce its risk in case of a default.

Plans for the Proceeds

A bank may be more willing to issue a HELOC on your home if it has assurances that you are going to pay off the tax lien with the money.

DTI Ratio

If you have an extremely low debt-to-income (DTI) ratio, the bank may issue a HELOC even with a tax lien present. However, if you have such a high level of income, it may be easier just to use your income to pay the tax lien before applying for the HELOC.

Let Us Help You Determine Whether You Can Get a HELOC With a Tax Lien

Because of how tax liens work, they can place several limitations on your financial options for your property. If you want to seek a loan on the property while the lien is in place, qualifying for a HELOC with a tax lien becomes quite complex.

At Levy & Associates, we are ready to help you figure out whether you can get a HELOC with a tax lien in place. We help many of our clients determine the best way to deal with federal tax liens, and we can help you, too. To learn more, call us today at 800-TAX-LEVY or contact us online.

Contact Levy & Associates for Dependable Tax Audit Services

Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.

There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.