{"id":7403,"date":"2025-03-10T14:35:16","date_gmt":"2025-03-10T19:35:16","guid":{"rendered":"https:\/\/tomo.com\/blog\/?p=7403"},"modified":"2025-09-04T09:12:06","modified_gmt":"2025-09-04T14:12:06","slug":"buying-a-new-car-when-buying-a-home","status":"publish","type":"post","link":"https:\/\/tomo.com\/blog\/buying-a-new-car-when-buying-a-home\/","title":{"rendered":"Buying a New Car When Buying a Home"},"content":{"rendered":"\n

Buying a car and buying a house are two of the biggest financial moves most people make\u2014and if you\u2019re planning to do both in the same year, the order matters. A new auto loan or a dip into savings for a car down payment can ripple through your mortgage application<\/a> in ways many buyers don\u2019t anticipate.<\/p>\n\n\n\n

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Why a Car Loan Can Complicate a Mortgage<\/strong><\/h3>\n\n\n\n

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Mortgage lenders look closely at your debt-to-income ratio (DTI<\/a>)<\/strong>\u2014the share of your monthly income that goes to debt. Most lenders want it under 43%, but lower is always better. A $500 car payment might not sound huge, but it can be enough to push you out of mortgage eligibility or cost you a higher interest rate.<\/p>\n\n\n\n

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New car financing also triggers a hard credit inquiry<\/a><\/strong> and adds a fresh account, which can shave points off your credit score\u2014especially if you don\u2019t have a long credit history. racket. And if you spend thousands on a car down payment, you may have less left for your home down payment, closing costs, or cash reserves (which some loan types require).<\/p>\n\n\n\n

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When Buying the Car First Makes Sense<\/strong><\/h3>\n\n\n\n

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That said, sometimes you can\u2019t avoid it. If your car is unreliable or you need one for work, buying before the home might be the right call. A responsibly managed auto loan can even help you build credit\u2014just make sure you aren\u2019t stretching your budget. If you can pay cash for the car and still keep your home savings intact, the impact on your mortgage eligibility is much smaller.<\/p>\n\n\n\n

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Small Adjustments That Make a Big Difference<\/strong><\/h3>\n\n\n\n

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If you already have a car loan with fewer than ten payments left, lenders may not even count it toward your DTI. Paying off an existing car loan\u2014or refinancing into a lower monthly payment\u2014ahead of a mortgage application can improve your approval odds. Another smart move: if you absolutely need a car, opt for a reliable used model instead of the shiny new one. That smaller loan balance keeps your DTI in check.<\/p>\n\n\n\n

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Buying Both in the Same Year<\/strong><\/h3>\n\n\n\n

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If you\u2019re determined to buy both in the same year, timing is everything. Don\u2019t finance a new car in the middle of your mortgage application\u2014lenders re-check credit before closing, and new debt can derail the deal. If you must, wait until after your home closes.<\/p>\n\n\n\n

If you flip the order\u2014buying a home first\u2014give yourself a few months before financing a car. You\u2019ll want to see how your new housing costs settle in before adding another fixed payment.<\/p>\n\n\n\n

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Other Things to Keep in Mind<\/strong><\/h3>\n\n\n\n

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Refinancing a car loan to lower the payment can help, but it still triggers a credit pull\u2014so do it months before applying for a mortgage, not right before. And before making either purchase, run the numbers.Mortgage calculators can show you how each payment affects your monthly budget and overall affordability.<\/p>\n\n\n\n

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Why Rate Shopping Matters More Than You Think<\/strong><\/h3>\n\n\n\n

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The mistake many buyers make is accepting the first offer they get. Lenders don\u2019t all price loans the same way, so it pays to compare mortgage lenders<\/a><\/strong> and see how much room you actually have in your budget. Getting the best deal on your mortgage can be the difference between holding off on a car and being able to comfortably afford both.<\/p>\n\n\n\n

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Key Takeaway<\/strong><\/h3>\n\n\n\n

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Most of the time, it\u2019s smarter to wait on the car until after you\u2019ve closed on your home<\/a>\u2014unless you can pay cash or keep your DTI and savings strong. Both purchases are doable in the same year, but understanding the order and the impact of each move can save you thousands and prevent last-minute surprises.<\/p>\n\n\n\n

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Buying a car and buying a house are two of the biggest financial moves most people make\u2014and if you\u2019re planning to do both in the same year, the order matters. A new auto loan or a dip into savings for a car down payment can ripple through your mortgage application in ways many buyers don\u2019t […]<\/p>\n","protected":false},"author":31,"featured_media":7641,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[307,299,300,308,298],"class_list":["post-7403","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-buying-a-car","tag-buying-your-first-home","tag-debt-roundup","tag-dti","tag-homebuying"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/tomo.com\/blog\/wp-content\/uploads\/2025\/03\/u6751982626_a_new_car_versus_a_new_home_-chaos_5_-ar_43_-p_412d584d-a0f4-4fcf-ab7b-7c44ab649916_1.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/7403","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/users\/31"}],"replies":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/comments?post=7403"}],"version-history":[{"count":3,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/7403\/revisions"}],"predecessor-version":[{"id":7521,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/7403\/revisions\/7521"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/media\/7641"}],"wp:attachment":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/media?parent=7403"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/categories?post=7403"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/tags?post=7403"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}