March 31, 20263 min read
The simple version is easy; the mortgage-specific details are where the answer becomes valuable. A car payment can reduce mortgage buying power because lenders include recurring vehicle debt when calculating total debt service.
How the mortgage math works
Here is what matters most:
- A large monthly payment can matter more to qualification than the total balance remaining on the car loan.
- Leases are also recurring obligations and are generally included in the debt calculation.
- Paying off a small remaining balance before applying may help in some cases, but only if the lender can exclude the payment under its policy.
- Do not take on a new vehicle loan between pre-approval and closing without checking the mortgage impact first.
If homeownership is the near-term goal, compare the mortgage cost of a vehicle payment before upgrading the car.
Want this applied to your own numbers?
Call Phil Cragg at 866-349-4915 or request a written comparison.
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