Realtors: BNPL Is Killing Closings in Idaho (How to Stop It)

You warn your clients about buying a new truck. You tell them not to quit their job. You even remind them not to mattress-money their cash for closing.

But there is a new “deal killer” in 2026 that is quietly ruining debt-to-income ratios across the Treasure Valley, and most buyers don’t even realize it's debt.

It's called BNPL (Buy Now, Pay Later).

The “Phantom Debt” Trap in 2026 Real Estate

Services like Affirm, Klarna, Afterpay, and PayPal Pay in 4 have exploded in popularity. They are everywhere - from Amazon checkouts to clothing stores. They allow buyers to split a $200 purchase into four “easy” payments of $50.

To a buyer, this feels like responsible budgeting. They aren’t using a credit card; they are just splitting up the payment.

To an underwriter, this is a nightmare.

Why Underwriting Hates BNPL

Here is the problem: Underwriters treat these installment plans just like any other debt. That $50/month payment for a pair of shoes? It hits the Debt-to-Income (DTI) ratio exactly the same way a credit card payment would.

But it gets worse.

Because these are often short-term loans, the monthly payments can be disproportionately high compared to the balance. A buyer might only owe $500 total, but if they have five different “Pay in 4” plans active, their monthly obligation could be $250+.

In the mortgage world, $250/month in debt obligation can reduce a buyer’s purchasing power by roughly $30,000 to $40,000.

That is enough to disqualify a buyer from the home they just wrote an offer on.

The “Soft Pull” Myth

Many buyers think, “Oh, Affirm said it was a soft pull, so the lender won’t see it.”

Wrong.

While the initial inquiry might be a soft pull, the debt itself often shows up on the credit report. Even if it doesn’t, underwriters see the payments coming out of the bank statements during the final review. If undisclosed debt is found days before closing, the file goes back to underwriting, the DTI is recalculated, and the deal is often dead.

The Script: How to Protect Your Commission

You can’t control what buyers do, but you can warn them. Add this simple line to your initial buyer consult script:

“We all know not to buy a car during the process. But please also avoid ‘Pay later’ options like Affirm or Klarna at checkout. Even small payments for clothes or electronics count as debt and can disqualify you from the mortgage. Use a debit card or cash only until we have keys in hand.”

Save the Deal Before It Dies

If you have a client who just mentioned they “bought a few things for the new house” using payment plans, don’t wait.

Click here to contact us for a second opinion. We can run the numbers immediately to see if the DTI still works or if we need to structure a payoff at closing to save the deal.

Frequently Asked Questions About BNPL and Mortgages

Does Affirm or Klarna affect getting a mortgage?

Yes. Lenders count these monthly payments toward your Debt-to-Income (DTI) ratio. Multiple small payments can lower your purchasing power significantly.

Do lenders see Buy Now Pay Later on credit reports?

Many BNPL services now report to credit bureaus. Even if they don’t, lenders will see the payments on your bank statements during the underwriting process.

Can I pay off BNPL debt to qualify?

Yes. Often, paying off these small balances before closing can fix your DTI ratio. However, you must disclose them to your loan officer immediately.

Is it okay to use “Pay in 4” if I pay it off quickly?

It is risky. If the balance is active when your credit is pulled or your file is underwritten, it counts as debt. It is safest to avoid these services entirely while buying a home.