Buy Now, Pay Later (BNPL) services, such as Affirm Holdings Inc. (NASDAQ:AFRM), Klarna Group PLC (NYSE:KLAR), Afterpay and PayPal Holdings Inc. (NASDAQ:PYPL) Pay Later, have become a common way to split everyday purchases into short installments. However, mortgage experts say that seemingly small debts can create headaches during underwriting, especially if they are not reflected on credit reports but are visible in bank statements.
Lenders Scrutinize Bank Statements For BNPL Debts
According to experts at Ameris Bank, a financial institution that provides online and mobile banking services, lenders assess far more than a credit score during mortgage approval. They review income, assets, liabilities, credit history, monthly obligations and spending patterns and scrutinize recent bank statements for recurring payments that may be missing from a credit file. BNPL often lands in that bucket, potentially nudging a borrower's debt-to-income ratio (DTI) higher.
"BNPL is becoming more visible in underwriting systems," said Brett Hively, senior vice president and mortgage capital markets and financial strategist at Ameris Bank, in a blog post in August. "We're seeing more cases where these accounts prompt additional documentation or affect DTI calculations."
That visibility is increasing industry-wide. Fannie Mae guidance instructs lenders to verify significant debts that aren't reflected on a credit report, a practice that can capture BNPL obligations discovered in statements.
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New Credit Models Add BNPL
Scoring models are shifting, too. In June, FICO announced new credit score versions designed to directly incorporate BNPL data, with availability beginning in fall 2025. The change aims to give lenders a fuller view of consumers, particularly those with thin files, but widespread adoption will take time.
Loan Officers Warn Multiple Plans Inflate DTI
Front-line loan officers say borrowers routinely underestimate the effect. "Most people applying for a loan don't even think about all these debts they have. Now people are taking out BNPL on everyday items, and they’re paying on six to 10 different plans at a time," said Mosi Gatling, senior vice president at New American Funding. "When we factor that into their mortgage application, I have to tell them they have to pay them all off or factor it into their [debt when they are attempting to qualify for a loan.]"
Consumer advocates back a balanced approach. "We want people to get the credit that they need—but we don’t want lenders to be flooding the market with credit beyond what’s safe and reasonable for consumers," said Adam Rust, director of financial services at the Consumer Federation of America, in remarks cited by NPR.
The takeaway for would-be homebuyers is to keep BNPL tabs low and expect underwriters to count active plans in DTI and assume recent statement activity will be reviewed, whether or not it's on your credit report.
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