Can you get a HELOC with a lien or judgment on your home?
Liens show up in the title search. Most must be paid or subordinated before a HELOC closes.
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Can you get a HELOC with a lien or judgment on your home?
Often yes, but judgment liens, tax liens and mechanic's liens on your home usually have to be paid off before the HELOC closes, often from the HELOC itself at closing, so the new line has clear priority. The IRS can subordinate a federal tax lien in some cases.
On this page
Common liens
- Judgments from lawsuits or collections
- Tax liens from the IRS or state. Using a HELOC for tax debt
- Mechanic's liens from unpaid contractors
- HOA liens for unpaid dues
Use a free calculator, or get your HELOC rate from Shawn.
Tip
Pull a property report before applying so there are no surprises in the title search.
Example
A homeowner has a $9,000 judgment lien from an old credit card lawsuit and wants a $60,000 HELOC. The title search finds the lien. The lender approves the line on the condition that $9,000 plus interest is paid at closing from the HELOC, and the title company records a release. The borrower receives about $51,000 in available credit after the payoff.
How different liens are handled
- Judgment liens: paid at closing, or settled with the creditor for less, with a written release.
- Federal tax liens: paid off, or subordinated using IRS Form 14134. IRS debt and HELOCs.
- State tax liens: usually paid off; some states allow subordination.
- Mechanic's liens: from unpaid contractors; resolved by paying or disputing them, and sometimes bonded off.
- HOA liens: for unpaid dues; paid at closing.
- Child support liens: paid or released through the state agency.
Old liens that were paid but never released
A common surprise: a lien you paid years ago still shows on title because the release was never recorded. Contact the creditor for a release, or ask the title company to help. It can take a few weeks.
Check before you apply
Search your county recorder's website by your name, or ask the title company for a preliminary report early. Knowing about a lien before the lender does lets you plan the payoff.
What the lender sees and why it matters
Before approving a HELOC, the lender orders a title search covering recorded documents against your property and judgments against your name in the county. Anything recorded ahead of the new line could be paid before the HELOC in a sale or foreclosure, which is why lenders insist on clearing it. Judgments against someone with a similar name sometimes show up too; a signed statement of information, listing your past addresses and identifying details, helps the title company rule those out. If a lien is in your spouse's name only, rules depend on your state's community property laws. Ask the title officer early: they can tell you exactly what's needed to clear each item and how long releases typically take in your county.
Also asked
Can I negotiate a judgment down before paying it at closing?
Often yes. Creditors with old judgments may accept less than the full amount for a quick payoff. Get the settlement and release terms in writing before closing.
Does an expired judgment still matter when getting a HELOC?
Sometimes. An expired judgment may still show on title until a release or court order clears it, which can hold up a HELOC. Judgments expire or must be renewed under state law, and the title company can tell you what's needed.
Will a lien hurt my HELOC rate?
The lien itself doesn't change the rate once it's resolved, but the circumstances behind it may affect your credit score, which does.
Can I get a HELOC if a lien is on title but I'm disputing it?
Usually not. A HELOC lender needs clear priority, so a disputed lien on title generally has to be resolved or bonded off before the line can close. Ask the title officer early what it will take.
Will paying a lien at closing reduce my HELOC line?
No, the HELOC's credit limit stays the same, but part of it is used for the payoff, so available credit drops. Paying a $9,000 judgment from a $60,000 line, for example, leaves about $51,000 available.
Does a judgment affect my credit score?
Not directly. The major credit bureaus no longer include civil judgments on credit reports, but the debt behind a judgment may appear as a collection, and the lien still shows on title for a HELOC lender.
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Sources
Official sources behind this guide.
- What is the difference between a home equity loan and a HELOC? · Consumer Financial Protection Bureau
- What you should know about home equity lines of credit (booklet, PDF) · Consumer Financial Protection Bureau
- Find a HUD-approved housing counselor · Consumer Financial Protection Bureau