If you are searching for a judgment lien home loan, the short answer is that FHA does not ban borrowers with judgments, but the judgment generally has to be paid off or placed on a documented repayment plan before closing. A lien recorded against the property you are buying or refinancing must also be cleared, because FHA requires its mortgage to sit in first-lien position. That makes a judgment a solvable problem, not a dead end.
The real risk is timing and paperwork. Many buyers pay a collector, assume the matter is closed, and then find the lien still sitting in the land records when the title company runs its search. Duane Buziak walks FHA buyers through that sequence so the surprise comes before the application, not at the closing table.
Judgment vs. Judgment Lien: What Lenders See on Your File
A judgment is a court ruling that you owe a debt. It comes from a lawsuit, often over a credit card, medical bill, landlord claim, or personal loan, and it may be entered by default if you never responded to the summons. A judgment lien is what happens when that judgment is recorded against real property, usually in the county or city land records where you own property. The judgment is the debt. The lien is the creditor’s claim on your real estate.
Because the two live in different places, a lender may see one, both, or neither on a given report. In 2017 and 2018, the three national credit bureaus removed tax liens and many civil judgments from consumer reports under their National Consumer Assistance Plan, after data-quality problems with the records. Bureau practice can change, so confirm the current approach rather than assuming it. The practical result is that a judgment may be missing from your credit report and still turn up in a title search or lien search, which is a public-record check done through the land records.
Three details are worth knowing:
- Moving does not erase it. A lien recorded in one locality stays there, and a judgment can often be transferred or recorded in other localities where you later own property.
- Waiting does not make it disappear on its own. Judgment liens expire only after a statutory period, and creditors can often renew them. In Virginia, judgment provisions sit in Title 8.01 of the Code of Virginia, and the enforcement period has historically been long, measured in decades. Confirm current terms and renewal rules with the clerk or an attorney.
- Other states differ. Florida, Tennessee, Georgia, and the District of Columbia each set their own durations, recording steps, and renewal rules. Do not apply Virginia’s timeline to a property elsewhere.
Knowing which version you have, an unrecorded judgment or a recorded lien, tells you what has to be cleared before FHA will insure the loan. If your file also involves an unpaid tax debt, see how a tax lien can affect your FHA mortgage approval, since the rules are similar but not identical.
What FHA Requires When a Judgment Appears
The governing source is HUD Handbook 4000.1, the FHA Single Family Housing Policy Handbook, in the underwriting section covering collections, judgments, and liens. As the handbook has read in recent editions, outstanding judgments must generally be paid off before or at closing. The exception is a borrower who has an agreement with the creditor and has made timely payments under it. Wording and as-of dates are updated periodically, so check the current edition at hud.gov before relying on this summary.
First-lien position
FHA insures only mortgages that hold first-lien position. If a judgment lien is attached to the property you are buying or refinancing, it can sit ahead of or alongside the new mortgage in priority. That is typically resolved by paying the lien from closing proceeds or otherwise obtaining a release before the mortgage records.
How a repayment plan counts toward DTI
When the judgment stays open under a repayment agreement, the monthly payment is counted as a debt in your debt-to-income ratio. Here is an illustration, not a quote. Suppose your gross monthly income is $5,500, and your proposed housing payment plus existing debts total $2,200. That is a 40.0% DTI. Add a $200 judgment payment and the total becomes $2,400, or 43.6%. Two hundred dollars moved the ratio by about 3.6 points, which can be the difference between a clean approval and a tighter file. Borrowers carrying other recurring obligations will recognize the same math from student loan debt and FHA mortgage approval.
Federal debt judgments
Judgments tied to delinquent federal debt are handled differently. FHA screens borrowers through CAIVRS, the Credit Alert Verification Reporting System, which flags federal debt in default. A CAIVRS hit generally has to be resolved, for example through payment or a documented arrangement with the federal agency, before the loan can proceed. Check the current handbook language for the specifics on your situation.
Three Ways to Clear a Judgment Before Closing
Which route fits depends on the size of the judgment, your cash, and whether the lien touches the home you are buying.
- Pay in full and record the satisfaction. Once the creditor is paid, you need a satisfaction of judgment, a document confirming the debt is resolved, filed with the court and, where a lien was recorded, with the land records. Get a certified copy and give it to your underwriter.
- Negotiate a written settlement or repayment agreement. If paying everything at once is unrealistic, a written agreement with the creditor can satisfy FHA’s exception, provided you then make the payments on time. Keep bank records or creditor statements showing each one. The underwriter will want proof the plan is being honored, and the payment will count in your DTI.
- Pay from closing proceeds through the title company. When the lien is on the subject property, the title company can obtain a payoff figure, list it on the settlement statement, and pay it at closing so the release is recorded. This works well for refinances and for some purchases, but the payoff has to be built into your cash-to-close or covered by the seller.
If the judgment is against the seller, it is the seller’s problem to clear at closing. It can still delay a sale if the payoff exceeds their available proceeds or the creditor is slow to issue a payoff letter, so ask your agent to have title work ordered early. Delays like this are also why many buyers learn how to buy a house while selling a current home before they make an offer.
The mistake that keeps the problem alive
Paying the collector is not the same as clearing the lien. A collection agency may accept payment without ever filing a release in the county or city records. Your credit report might show the account as paid while the title search still shows an open lien. Ask for the recorded satisfaction, confirm it posted with the clerk, and do not treat a payment receipt as a release.
How a Judgment Interacts With FHA Credit Score and Eligibility Tiers
Under HUD Handbook 4000.1 (confirm the current edition and as-of date at hud.gov), FHA credit tiers work like this:
- 580 and above: eligible for the 3.5% minimum down payment.
- 500 to 579: eligible with at least 10% down.
Those are FHA’s floors. Individual lenders often add higher minimums, called overlays, such as a 620 score cutoff or tighter rules on derogatory items. FHA sets no blanket ban on judgments, but overlays on judgments, collections, and manual underwriting vary widely from one lender to the next. If your score sits near the floor, getting an FHA loan with a 580 credit score covers what to prepare.
A judgment can pull your score down, and paying it does not always raise the score quickly. Scoring models differ in how they treat paid derogatory items, and some judgments are not on your report at all. If you plan to apply in a few months, build the timeline around the paperwork (satisfaction recorded, payment history documented) and not around an expected score bump. Duane Buziak uses NoTouch Credit Pull, a soft pull with no hard inquiry, for the initial review, so you can see where your file stands without adding inquiries to your report.
The broader eligibility picture
- 3.5% down with a qualifying score, from your own funds or an eligible gift.
- The home must be your primary residence.
- Steady, documentable income, usually a two-year history.
- DTI within FHA guidelines. The long-standing benchmarks are about 31% for housing and 43% for total debt, but files approved through automated underwriting can go higher. Confirm exact ratios in the current handbook.
Derogatory items like an open judgment can push a file toward manual underwriting, where the benchmarks are applied more strictly and compensating factors such as cash reserves matter more. A broker who works with more than one lender can match your file to the guidelines that fit it best. Duane Buziak has access to 500+ wholesale lenders, which beats being limited to a single shelf of overlays. For a full checklist of the basics, review the FHA loan requirements every buyer must know.
What a Cleared Judgment Does to Your Real Monthly Cost: A Worked Henrico County Example
Every figure below is illustrative. Your rate, insurance quote, and assessed value will differ. Suppose a $300,000 purchase in Henrico County, Virginia, with 3.5% down ($10,500) and a base loan of $289,500. Henrico’s real estate tax rate is $0.85 per $100 of assessed value, per henrico.us. Confirm the current rate there before you rely on it.
- Upfront MIP (UFMIP) at 1.75%: $5,066.25, financed, for a total loan of $294,566.25.
- Principal and interest at an assumed 6.50% over 30 years: about $1,862.
- Annual MIP at 0.55%: about $133 per month on the base loan.
- Property tax: $300,000 at $0.85 per $100 is $2,550 a year, or $212.50 per month, assuming assessed value equals price.
- Homeowners insurance, assumed: $110 per month.
That totals about $2,317 per month. Add a $200 judgment repayment and your monthly obligations become about $2,517. If gross income is $7,000 a month (also an assumption), the housing payment alone is 33.1% of income, and with the $200 judgment payment included it is 36.0%. Clearing the judgment before closing removes that $200 from the DTI calculation entirely, though it may cost you cash up front.
MIP structure
Verified against HUD guidance (Mortgagee Letters 2015-01 and 2023-05), to be rechecked in Handbook 4000.1 Appendix 1.0 before use:
- UFMIP: 1.75% of the base loan amount, flat.
- Annual MIP, 30-year term, base loan at or under $726,200: 0.50% when LTV is 95% or lower, and 0.55% when LTV is above 95%. The 0.55% tier in this example applies because the loan is over 95% LTV.
- Annual MIP, 30-year term, base loan over $726,200: a higher tier, 0.70% or 0.75% depending on LTV.
2026 FHA loan limits
For case numbers assigned on or after January 1, 2026 (HUD Mortgagee Letter 2025-23), the one-unit limit is $541,287 at the floor and $1,249,125 at the ceiling. Look up your county’s exact limit on the HUD limits page. These figures should be re-verified within 90 days of publication.
Duane Buziak’s Approach: Sorting Out Judgments Before You Apply
Duane Buziak is a mortgage broker, not a lender. That matters with a judgment on file, because he can compare how different lenders treat it instead of living with one lender’s overlays. The Dare to Compare pricing challenge extends the same idea to rates and fees. Buyers who have already been turned down can read strategies for finding an FHA loan broker after a denial elsewhere.
The process usually runs in this order:
- Review your credit report and a title or lien search, using NoTouch Credit Pull for the initial look.
- Request payoff letters from each creditor.
- Document any repayment agreement in writing and gather proof of payments.
- Confirm recorded releases, then submit the file to the lender whose guidelines fit best.
The focus is Virginia and the Richmond metro, where Duane Buziak is based. Judgment lien rules and durations differ in Florida, Tennessee, Georgia, and the District of Columbia, so confirm local rules with the clerk of court or an attorney. This article is general education, not legal advice.
Questions borrowers ask
Can I get an FHA loan with an unpaid judgment? Generally only if it is paid by closing or covered by a written repayment agreement with timely payments.
Does paying a judgment remove it from my credit report? Not necessarily. It may be marked satisfied, or it may not appear at all, given the bureaus’ reporting changes.
How long does a judgment lien last in Virginia? Historically about 20 years with renewal possible. Confirm current terms in Title 8.01 or with the clerk.
Can a judgment lien be removed without paying? Sometimes, through a successful challenge, bankruptcy, or expiration, but those are legal matters for an attorney.
Does a judgment affect an FHA streamline refinance? A recorded lien on the property can still threaten first-lien position, so it must be addressed. Streamline credit requirements are lighter, but title still matters.
Can I buy a home if the seller has a lien? Yes, if the payoff is made from the seller’s proceeds at closing and the release is recorded.
Do tax liens work the same way? They are similar but not identical. Tax liens often have different payoff and priority rules, so they need separate review. Our guide to the best lenders and brokers for tax lien mortgage approval covers that path.
Will FHA approve me if I’m on a payment plan? It can, if the agreement is documented, payments are timely, and the payment fits within your DTI.
A Judgment Lien Is a Paperwork Problem You Can Solve
Once a judgment is paid with a recorded release, or sits on a documented and honored repayment plan, it stops being the reason an FHA file stalls. What decides the outcome is the order of the steps and whether each one is on paper.
Ready to take the first step toward homeownership with an FHA loan tailored to your needs? Schedule your free consultation today and discover how our award-winning team can help you navigate the path to your new home with competitive rates and expert guidance. FHA Mortgages by Duane Buziak offers 500+ wholesale lender access, the Dare to Compare pricing challenge, NoTouch Credit Pull (a soft pull, no hard inquiry), and no-out-of-pocket closing options. Call 804-212-8663 or visit 4860 Cox Rd, Glen Allen, VA 23060.
