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How will my Honda Civic car loan affect my chance to get a mortgage?
I recently financed a Honda Civic about six months ago. After talking to my wife, I found out she was pregnant, so now we want to look for a house. How does my car loan affect my chances to get a mortgage?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Congratulations on your upcoming fatherhood! It’s an exciting time, and you don’t want finances to dampen that excitement.
If you’re looking for a mortgage, your
car loan
may affect your chances of approval or what you get approved for.When you get a car loan, you will experience a small hit to your credit score due to a shortening of your average credit length and the hard inquiries used by employers. This may make your credit score fall by anywhere from five to 20 points.
A car loan may also impact your ability to get a mortgage due to an increase in your debt-to-income ratio. This ratio is your total monthly debt payments (including credit card minimums) divided by your total income. If this ratio is above 43% due to your car loan, you may have difficulty securing a mortgage.
The two scenarios mentioned above won’t necessarily disqualify you entirely. But lenders may require a larger down payment or give you a higher interest rate than you would get if you didn’t have a car loan.
If you’re searching for ways to save money, make sure to evaluate the car insurance policy on your Civic. Then, sign up with insurance broker
Jerry
. Once you sign up, compare quotes from up to 50 insurers, so you get the best rates possible—you can even look to bundle home and auto insurance. Once you make your choice, Jerry will take care of the rest. View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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