One of the first things that a mortgage professional will ask a borrower is the borrower’s income and debt payments.

The New York Times reported that:

“The new reality is that cars are becoming more expensive… People are having to make tough decisions about financing.”

It’s not uncommon for me to see borrowers spending more than 10% of their gross income on the car payment alone. Please remember that generally, for every dollar’s payment that you make on your car loan, another dollar goes toward insurance, gas, maintenance and repairs.

“The average price of a new car or light truck in 2016 is about $34,000, according to Kelley Blue Book.”

I have lost count of the number of times that I could not do a loan for a potential borrower because his/her car payments were a third or half of most people’s mortgages!


  1. You can’t live in your car.
  2. Cars are depreciating assets.
  3. Mortgages are more difficult to qualify for than auto loans.

I would like to expound a little more on #3. A lot more rules surround mortgage lending (because of what happened in 2008), so even if the car dealership tells you that “you’re a well-qualified borrower,” that applies in the world of auto loans. Mortgage loan approvals are… different.

Also, note that auto loans tend to be higher rates at a shorter term. This means that in general, for every $10,000 that you borrow for a car on a 5-year term, your payments are about $180, assuming that your interest rate is at a (very!) low of three percent.

Assuming the same (very!) low interest rate of three percent, that same $180 could have been paying off more than $42,000 in a 30-year mortgage!

What am I trying to say?

Talk to a financial adviser. I have recommendations. See below on how to contact me.

Just because you qualify for an auto loan doesn’t mean you will be a well-qualified home buyer.

If you’re planning on buying a car and a house at around the same time, discuss that with your mortgage lender to see if your car purchase could derail your home ownership plans.

Questions about rates today, or about your specific situation regarding mortgage approval? Contact me today!