Tax debt pay off prior to closing

[Mateo Way]

Hea BP Forums!

I have found myself in a bit of a pickle.

My wife and I have a property under contract for 345k with 20k in seller credits at closing, funded with a FHA loan. We passed inspection with only some minor painting touch ups to be addressed prior to closing. Appraisal came back at $410k (65k in instant equity BEFORE reno!).

We thought we were in the clear and ready to start our investing journey when our funding came back as “conditional”, we took care of all of the issues with the necessary paperwork BUT we do have a pending tax payment for 2021 that is scheduled to be paid in August of this year. 

The lender wants us to pay the total in full at closing (its slightly over 20k which is money we don't currently have on hand) OR get placed on a payment plan. The payment plan WOULD work out great if we weren't at 48% on our DTI. The monthly payment would be doable but would place us above the max DTI for approval.

Im stumped as far as how to proceed as most bridge loans are at $100k + and most small lenders wont loan on rule properties that have more than 2 acres (this 6 bed, 3 bath sits on 29 acres with its own pond and creek). 

Im not sure how else to proceed. Neither my wife and I have friends or family who we could borrow the funds for on a short period. 

Any suggestion would be GREATLY appreciated!!! 

[Mateo Way]

Quote from @Kevin Sobilo:

@Mateo Way, ok what is causing your DTI to be 48%? Is there any way to refinance any of those obligations to stretch those out more lowering the payments and thereby lowering your DTI? Even selling a car to drop a car loan could help you get this closed and then figure out how to get another car after.

Another option to explore might be a USDA loan. They do loans in rural areas and offer 100% financing. So, that would lower your down payment and free up some money to go towards that tax debt.

 Between my wife and I we do have a decent amount of “bad debt”. We’ve spent the last 3 years saving and paying it down but our younger selves really dug us a hole. So it’s taking some time. Im going to reach out to our debt consolidation loan and see if we can stretch that payment out further.

I do own 2 cars out right so the option of selling one may help.

Im worried about trying to change the loan product this far into the process as we don’t want the sellers to back out of the deal. I guess it wouldnt hurt asking at this point. Thank you for the insights and suggestions.