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Timeshares and Mortgages: What You Need To Know

Writer: Jonathan ShupeJonathan Shupe
Feb 82 min read

Updated: Feb 21


Illustration of pink resort-style buildings with palm trees. Text reads 'Timeshares and Mortgages: What You Need to Know

If you own a timeshare and are applying for a mortgage, you might assume it counts as a mortgage payment. However, that’s not the case. Lenders and underwriters treat timeshares as installment loans, not mortgages, which affects how they appear on your credit report and how late payments impact future loan approvals. You may have even been told by your loan officer that getting a mortgage with late payments or delinquencies on your timeshare isn’t possible. Unfortunately, they were uneducated on the topic and let you down. 

Misinformation about timeshares is common—even among professionals—so let’s clear up the confusion.


Mortgage and Timeshares: How Lenders View Timeshares

When a lender runs your credit through an Automated Underwriting System (AUS), timeshare payments often appear as a mortgage—because technically, they are. However, mortgage guidelines dictate that timeshares must be treated as installment loans, not traditional mortgages. Since they are not tied to real property in the same way as a home loan, they are financed more like a personal or auto loan. Because of this distinction, underwriters must manually override the AUS classification to ensure it is correctly accounted for.


Why This Matters For Your Mortgage

  1. Debt-to-Income (DTI) Ratio – Since timeshares count as installment loans, they can impact your ability to qualify for a mortgage differently than a real mortgage would.

  2. Credit Reporting Issues – If a timeshare gets categorized as a mortgage on your credit report, it could cause unnecessary hurdles in underwriting. A savvy underwriter will need to correct this in the AUS to ensure an accurate assessment.

  3. Loan Approval Process – Not all lenders (or loan officers) are familiar with this distinction. If your timeshare is misclassified, it could lead to delays or even incorrect denials.


    The mortgage professionals at Shupe Lending Group have extensive experience in originating and funding conventional loans for borrowers who have a timeshare, or who have had a timeshare foreclosure.


What You Should Do


  • Work with a Knowledgeable Loan Officer – Not all lenders are well-versed in how timeshares affect the mortgage process. Finding one who understands how to handle this can save you time and frustration.



Bottom Line


Timeshares do not count as mortgages when applying for a home loan, but they can still impact your mortgage approval. Understanding how they are classified and ensuring they are correctly coded in underwriting can help prevent unnecessary roadblocks.



Man In Fianance

Jonathan Shupe NMLS ID# 1649211 is Manager of Shupe Lending Group NMLS ID# 2478065. Jonathan Shupe and his team of loan officers are licensed in multiple states. Many of the borrowers of Shupe Lending Group are individuals who did not qualify at other lenders due to those lenders overlays on government and conventional loans. We have a reputation of being able to work with over 270 different lenders to be able to offer out clients dozens of non-QM and alternative financing loan programs. Any non-QM mortgage loan program available in the market will be offered by our team at Shupe Lending Group. Our team is available 7 days a week, evenings, weekends, and holidays.

 
 
 

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