Can Afterpay Affect Home Loans? Avoid Surprises (2026)

As you're planning to buy a home, you're likely aware that lenders scrutinise every detail of your financial life. But, have you considered how your Afterpay usage might affect your home loan application? Let's delve into the potential impacts and explore how to navigate these waters to secure your dream home.

Understanding Afterpay and Home Loans

Afterpay is a popular 'buy now, pay later' service that allows you to make purchases and pay them off in four instalments over eight weeks. It's a convenient way to manage expenses, but it can also affect how lenders view your financial habits when you're applying for a home loan.

Lenders evaluate your financial health by examining your credit history, existing debts, and spending behaviour. Even though Afterpay doesn't directly affect your credit score like a credit card might, it reflects on your bank statements. Any missed payments or high usage could signal to lenders that you may not manage your finances as effectively as required for a significant commitment like a home loan.

Current Market Information and Requirements

As of 2026, the Australian housing market continues to experience fluctuations. Interest rates for home loans are currently ranging between 6.49% and 12%, depending on the lender and your financial profile. With 83+ lenders on our panel at Esteb and Co, we offer a diverse range of options tailored to various financial situations.

When assessing a home loan application, lenders typically consider the following criteria:

• Income: Stable and sufficient income to cover loan repayments
• Credit Score: Generally, a score above 620 is preferred
• Debt-to-Income Ratio: Ideally below 30%
• Employment History: Consistent employment over the past two years
• Existing Financial Obligations: Including Afterpay commitments

Steps to Mitigate Afterpay's Impact on Your Home Loan

1. Review Your Afterpay Activity: Analyse your Afterpay usage over the past year. Look for patterns of excessive spending or missed payments.

2. Reduce Outstanding Balances: Aim to have minimal to no outstanding Afterpay balances when applying for a home loan.

3. Maintain a Healthy Credit Score: Ensure you pay all debts on time, including Afterpay instalments, to maintain a good credit score.

4. Demonstrate Financial Responsibility: Create a budget and stick to it, showing lenders your ability to manage finances effectively.

5. Consult with a Mortgage Broker: At Esteb and Co, our experts can provide personalised advice and match you with lenders who consider your complete financial picture, including Afterpay usage.

Expert Tips and Considerations

Understand Your Spending Habits: Before applying for a home loan, take a hard look at your spending and adjust where necessary. Frequent small purchases through Afterpay can add up and reflect poorly on your financial habits.

Have a Clear Debt Repayment Plan: Show lenders that you have a strategy for managing debts, including Afterpay, that aligns with your overall financial health.

Keep Documentation Handy: Be prepared to explain your Afterpay activity. Lenders might request bank statements or other documentation showing your repayment history.

Prepare for Possible Impact on Borrowing Capacity: High Afterpay balances can reduce your borrowing capacity. Be proactive in minimising these effects by maintaining low or zero balances.

Frequently Asked Questions

Does Afterpay affect credit scores in Australia? Afterpay itself does not directly affect your credit score, but missed payments can be reported to credit bureaus.

How do lenders view Afterpay usage? Lenders may view frequent Afterpay usage as a sign of financial overextension, impacting your home loan application.

Can I use Afterpay after securing a home loan? Yes, but it's advisable to manage your finances wisely to avoid any future financial strain.

What is the best way to demonstrate financial responsibility to lenders? Maintain a consistent repayment history, manage debts effectively, and provide clear documentation.

Is it advisable to close my Afterpay account before applying for a home loan? Not necessarily. What's important is demonstrating responsible usage and ensuring minimal outstanding balances.

How can Esteb and Co help with my home loan application? We offer tailored advice and access to a broad panel of 83+ lenders, helping you find the best loan for your financial situation.