Buy Now, Pay Later (BNPL) programs have exploded in popularity. From online shopping to everyday purchases, these services—offered by companies like Affirm, AfterPay, Klarna, and PayPal Pay Later—make it easy to split payments into smaller installments, often interest-free. It feels convenient, but here’s what many homebuyers don’t realize: BNPL can affect your mortgage approval.
What Is BNPL?
BNPL allows you to purchase items now and pay for them over time, usually in equal installments. For many, it’s a way to manage cash flow without using credit cards. But while BNPL might seem harmless, it’s still a form of debt—and lenders are paying attention.
What Changed?
Starting in Fall 2025, major credit bureaus like FICO and Experian began including BNPL data in credit scoring models. That means:
- BNPL accounts now show up on your credit report.
- Missed or late BNPL payments can lower your credit score.
- Multiple BNPL accounts can increase your debt-to-income ratio (DTI).
Your DTI—the percentage of your income that goes toward debt payments—is a critical factor in mortgage approval. Even small BNPL payments can tip the scales if you’re close to the limit.
Why It Matters for Homebuyers
When you apply for a mortgage, lenders review your credit report and bank statements. BNPL payments, even if they’re small, count as obligations. If you have several BNPL accounts, it could:
- Reduce your credit score.
- Increase your DTI ratio.
- Make it harder to qualify for the loan amount you want.
In short, what feels like “invisible debt” can suddenly become very visible to your lender.
Smart Tips Before Applying for a Mortgage
If homeownership is on your horizon, here’s how to keep BNPL from becoming a roadblock:
- Track your BNPL accounts and payment schedules. Know what you owe and when.
- Avoid stacking multiple BNPL loans at once. The more accounts you have, the higher your DTI.
- Pay off BNPL balances before applying for a mortgage. This can improve your credit score and reduce your debt load.
- Review your credit report for BNPL entries. Make sure everything is accurate and up to date.
BNPL can be a helpful tool for managing purchases, but it’s still debt—and lenders treat it that way. If you’re planning to buy a home, take control of your BNPL habits now so they don’t stand in the way of your dream.
Ready to start your homebuying journey? Contact me today!
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