Medical debt: your credit and your mortgage application

A trip to the emergency room or a surgery can leave you with bills you did not expect. And many families wonder whether that debt will keep them from renting or buying a home. The answer has layers: there are rules from the credit bureaus, the loan programs, the hospitals and the federal surprise billing law. This guide explains each one with official sources, so you know what to check and what to ask for before you pay.

Medical collections below this no longer show on your report, according to the CFPB

$500²

How long the bureaus wait after your care before showing medical debt

1 year²

To apply for a nonprofit hospital's financial assistance, from the first bill

240 days⁶

When medical debt shows up on your report

According to the CFPB, the three nationwide credit bureaus (Equifax, Experian and TransUnion) changed how they report medical collections:²

• Paid medical debts do not appear on your report.
• Those less than a year old do not either: the bureaus wait one year from when you saw the doctor before letting the debt appear. That year gives you time to review the bill, negotiate, ask for help or pay.
• Medical collections under $500 were removed starting April 11, 2023.

There is a catch: these changes do not include credit card debts, even if you used the card to pay the doctor. To the bureau, that is credit card debt.² And remember that these are bureau policies, not a law. The federal rule that went further was vacated: the court said federal credit law allows reporting coded medical information that does not identify the provider or the type of service.¹

To know what appears in your case, check your reports. The three bureaus let you see them for free every week at AnnualCreditReport.com.² Our guide AnnualCreditReport step by step explains how, and How to read your credit report helps you find collection accountscollection accountA collection account is a past-due debt that the original creditor (the company that gave you the loan or credit) handed to a debt collector or sold to another company. A debt collector is a person or company that regularly collects debts owed to others, such as a collection agency, a lawyer or a debt buyer. The account can show up on your credit report; once you pay it, it should generally show a zero balance as a paid collection. Most negative information can be reported for up to seven years. If you think you do not owe the debt or the amount is wrong, you can dispute it with the collector and with the credit reporting company.See the full definitionClose.

If you see medical debt that should not be there

If you find a paid medical debt, one under $500, one less than a year old or an error on your report, the CFPB says you can dispute it with the credit bureau. If it is not resolved, you can submit a complaint to the CFPB.² The CFPB also told debt collectors and credit bureaus that they cannot collect, furnish or report invalid medical debt.²

How to review and clean up your medical debts

1. 1. Get your three reports

   Today

   At AnnualCreditReport.com you can see them for free every week.²

2. 2. Mark each medical debt

   This week

   Write down the amount, the date of care and whether you already paid.²

3. 3. Dispute what should not be there

   This week

   Paid, under $500 or less than a year old: dispute with each bureau.²

4. 4. Ask the hospital for help

   Before you pay

   If it is a nonprofit hospital, ask for its financial assistance policy.⁵

5. 5. If a collector calls, ask for validation

   At first contact

   Do not pay a debt you do not recognize; check that it is valid.²

6. 6. If it is not resolved, complain to the CFPB

   If needed

   The CFPB takes complaints about medical debt on your report.²

Our guide How to dispute credit report errors explains how to file a credit disputecredit report disputeA credit report dispute is the complaint you make when your credit report has wrong or incomplete information. You have the right to dispute it, and the investigation is free. It is usually done in two places: with the credit reporting company and with the company that supplied the information, called a furnisher, such as your bank, your landlord or your credit card company. You explain in writing what is wrong and why, with copies of your documents. The credit reporting company must investigate, generally within thirty days, and delete or correct anything found to be inaccurate, incomplete or unverifiable.See the full definitionClose in writing. If a collection agency contacts you, Debt collection: your rights explains the validation noticedebt validation noticeA debt validation notice is the letter or electronic message in which a debt collector gives you the basic information about the debt it is trying to collect. According to the CFPB, it usually comes in the collector's first contact with you or shortly after. It must say that it comes from a debt collector, which creditor the debt is owed to, the account number if there is one, an itemization of the amount with interest, fees and payments, the current amount and the last day of the period you have to dispute the debt. If you dispute it in writing within that period, the collector must pause collecting the amount you dispute until it responds.See the full definitionClose and how to respond.

Medical debt and your mortgage application

A medical collection does not always shut the door on a mortgage. The most common programs treat these debts more gently than others:

How FHA and Fannie Mae treat medical debt

HUD Handbook 4000.1

FHA loan

• Medical collections are not considered debt (TOTAL system)
• Other collections totaling $2,000 or more are reviewed
• For those, they are paid, put on a payment plan or counted at 5% of the balance

Selling Guide B3-5.3-09

Conventional loan (Fannie Mae)

• Medical collections do not count toward the limits
• They do not have to be paid off before closing
• On a one-unit principal residence, no collection has to be paid off

Each lender may have its own rules; ask how it treats your medical debt before you apply.

FHA. Under HUD Handbook 4000.1, on loans underwritten with the automated TOTAL system, medical collections are on the list of obligations that are not considered debt. For other collections totaling $2,000 or more, the lender must verify they are paid, that you have a payment arrangement included in your debt-to-income ratiodebt-to-income ratio (DTI)Your debt-to-income ratio (DTI) is all your monthly debt payments divided by your gross monthly income, that is, income before taxes. If you pay a certain amount each month across a car, cards, student loans and the mortgage you are asking for, and you earn three times that, your DTI is one third. Lenders use it to measure whether you can manage the payment; each loan type and lender sets its own limit, and assistance programs usually publish theirs. Paying down debt before applying improves your DTI.See the full definitionClose, or calculate a payment of 5% of the balance.³ Our FHA loan guide explains the rest of the program.

Fannie Mae. Medical collections are excluded from the collection limits and do not have to be paid before closing. And on a one-unit principal residence, you do not have to pay off non-mortgage collections, regardless of the amount.⁴ Our conventional loan guide explains how it works.

This does not mean medical debt does not matter: it can lower your credit scorecredit scoreA credit score is a number that predicts how likely you are to pay back a loan on time. It is computed from the information in your credit report: whether you pay on time, how much you owe relative to your limits, how long you have used credit and how many new accounts you opened. FICO is one brand of score; VantageScore is another, and each lender decides which one it uses. A higher score usually brings a lower interest rate and more loan options; each program publishes the minimum it accepts. You can check your report for free and dispute errors.See the full definitionClose, and each lender may have its own rules on top of the program’s. Before you apply, ask the lender how it treats your medical debt, and talk with a HUD-approved housing counselorHUD-approved housing counselorA HUD-approved housing counselor works at an agency HUD has approved to provide housing counseling: independent, expert advice customized to your situation about buying a home, renting, a missed mortgage payment, a foreclosure or credit problems. The agencies usually charge little or nothing; many serve in Spanish and offer the homebuyer education course several assistance programs require. They are not lenders or real estate agents and sell you nothing. Your county page lists the official agencies with phone numbers.See the full definitionClose if you do not know what to pay first.

Financial assistance at nonprofit hospitals

Many hospitals are nonprofits. To keep their tax exemption, the IRS requires rules that protect you:

• A written financial assistance policy. It must say who qualifies and whether help includes free or discounted care, and the hospital must widely publicize it, including on its website.⁵
• A limit on what you are charged. If you qualify for help, you cannot be charged more than what the hospital generally bills for emergency or medically necessary care.⁵
• Waiting periods before aggressive collection. The hospital must make reasonable efforts to find out whether you qualify before taking extraordinary collection actions, such as reporting you to credit bureaus. It must notify you of its policy and wait at least 120 days from the first bill after your care. You have 240 days from that bill to apply, the hospital must notify you at least 30 days before those actions, and it may accept applications at any time.⁶

The hospital is also accountable for what its collectors or debt buyers do.⁶ That is why you should ask for financial assistance before you pay, in writing, and keep a copy. Look for the policy on the hospital’s website or ask at the billing office.

Surprise bills: the No Surprises Act

The No Surprises Act took effect on January 1, 2022 and applies to most health coverage. It protects you from surprise out-of-network bills for:⁷

• Emergency room visits.
• Non-emergency care related to a visit to an in-network hospital or facility.
• Air ambulance services.

If you do not have or use insurance, the provider generally must give you a good faith estimate of what your care will cost, if you ask or schedule at least 3 business days ahead. If the bill is at least $400 more than the estimate, you can dispute it. You can also file a complaint, and phone help is available in Spanish and other languages at 1-800-985-3059.⁷

Example with real numbers

A family with an emergency bill and plans to buy a home

An example in words, not a real case, of how to use the rules in this guide.

The bill arrived three months ago

It is not a year old yet, so the bureaus do not show it on the report

The hospital is a nonprofit

They ask in writing for its financial assistance, within the 240 days

They qualify for a discount

They cannot be charged more than what the hospital generally bills

They want an FHA loan

Under HUD's Handbook, medical collections are not considered debt

What they decide

Ask for help before paying and ask the lender how it sees the debt

The rules come from the CFPB, the IRS and HUD.²⁶³ Use the credit plan to put your steps in order before you apply.

Run it with your numbersCredit plan

Before you pay: review, ask and negotiate

A medical bill is not always right. Before you pay, ask for an itemized bill that shows each service, the date and the price. If you have insurance, compare it with the explanation of benefits your insurer sends and call if something does not match. If the account is already in collections, ask in writing where the debt comes from before you make any payment.

If the debt is yours and you do not qualify for help, ask for a payment plan you can keep up with. Get the agreement in writing before paying, keep every receipt and do not give direct access to your bank account if you are not sure. And if you are saving to buy a home, build your family budget with the medical payment included, to see how much you can pay without touching your down payment.⁴

If this is you

You are buying a home with medical debt

Ask the lender how it sees it; FHA does not count it as debt in the TOTAL system.³

You cannot pay the hospital bill

If the hospital is a nonprofit, ask for its financial assistance before you pay.⁵

You paid the doctor with your credit card

That debt is the card's; the bureau changes do not cover it.²

A medical debt under $500 shows on your report

According to the CFPB, it should not be there; dispute it with the bureau.²

You have no insurance and the bill is much higher

If it is at least $400 more than your estimate, you can dispute it; call 1-800-985-3059.⁷

A collection agency called you

Do not pay something you do not recognize; the CFPB says invalid medical debt cannot be collected.²

Mistakes that cost you

• Mistake: Putting a medical bill you cannot afford on a credit card.

  Instead: That debt becomes card debt and loses the medical debt protections.²

• Mistake: Paying without asking for the hospital's financial assistance.

  Instead: If it is a nonprofit, ask for its assistance policy; it may include discounts or free care.⁵

• Mistake: Thinking the 2025 federal rule still protects you.

  Instead: It was vacated in July 2025; the bureaus' policies are what apply.¹

• Mistake: Draining your down payment savings to pay a medical collection.

  Instead: Ask the lender first: FHA and Fannie Mae do not require paying medical collections to close.⁴

• Mistake: Leaving a paid medical debt on your report.

  Instead: According to the CFPB, it should no longer be there; dispute it.²

• Mistake: Not asking for an estimate when you do not use insurance.

  Instead: The good faith estimate lets you dispute the bill if it comes in at least $400 higher.⁷

What to do this week

1. Get your three reports at AnnualCreditReport.com and mark each medical debt.²
2. Dispute medical debts that are paid, under $500 or less than a year old.²
3. Ask the hospital in writing for its financial assistance policy and apply.⁵
4. If you did not use insurance, compare the bill with your good faith estimate.⁷
5. If you are buying a home, ask the lender how it treats your medical debt.³
6. Put your steps in order with the credit plan and read What moves your credit score.