I will be selling our house within the next year and purchasing a home out of this god forsaken state. I have a car payment now. I have not purchased a home in over 26 years and have a question about having a car payment when qualifying for a mortgage. I have outstanding credit and no credit card debt. Does the bank consider the monthly car payment amount or the total owed when qualifying for a mortgage? I will be obtaining a VA loan. I searched but keep seeing different answers.
Thanks in advance.
Because son, it is what you are supposed to do.
Posts: 1882 | Location: Escaped to TN | Registered: October 29, 2004
It will be factored in to your debt to income ratio (DTI). As mentioned, shouldn’t impact you too much if buying within your means and your car payment isn’t astronomical.
Posts: 2679 | Location: The Low Country | Registered: October 21, 2008
I guess I should have phrased the question differently. Which will impact the available mortgage amount more, the monthly payment or the total owed? I will not have any debt other than the car payment, which is why I ask. Sorry for the confusion.
Thank you in advance.
Because son, it is what you are supposed to do.
Posts: 1882 | Location: Escaped to TN | Registered: October 29, 2004
One is mortgage payment, taxes plus property tax as percentage of income. The second is those amounts PLUS any other debt payments as a percent of income as someone noted above.
It’s impossible to generalize an answer to your restated question since the actual amounts being borrowed, terms, etc all affect the payments.
From what you’ve indicated tho I’d guess the mortgage payment only ratio will be your limiting factor if you’ve got only a modest car payment. Just run the numbers and you’ll quickly see.
The measure isn’t this loan amount vs that loan amount for these test though, it’s the underlying payment amounts.
You only have integrity once. - imprezaguy02
Posts: 12888 | Location: Madison, MS | Registered: December 10, 2007
Originally posted by whododat: I have outstanding credit and no credit card debt. .
Basically, your credit score + debt to income ratio has to meet certain requirements. You might have little debt, but little income & that can raise flags. In general, a car payment isn't that big of a deal, as long as it's in line with your income & other debt (ie, you didn't finance a Ferrari while making minimum wage).
Posts: 3350 | Location: IN | Registered: January 12, 2007
Correct, the monthly payment is more of a factor than the total payoff.
My wife is a loan processor, and she has seen a few times where they refinanced a vehicle from a 3 year loan to a 5 year loan to free up funds to reduce the DtI (debt to income) to acceptable levels.
I shall respect you until you open your mouth, from that point on, you must earn it yourself.
Posts: 3400 | Location: Southern Maine | Registered: February 10, 2008
(ie, you didn't finance a Ferrari while making minimum wage).
Ha! Not even close. We have no concerns, just wanted to stack everything in our favor as this will be our retirement home and wanted to factor everything in beforehand.
Because son, it is what you are supposed to do.
Posts: 1882 | Location: Escaped to TN | Registered: October 29, 2004
Unless you are disable the fees on a VA loan can be onerous. Check around and see if a conventional loan may be better for you. Assuming your down payment is significant.
Originally posted by whododat: I guess I should have phrased the question differently. Which will impact the available mortgage amount more, the monthly payment or the total owed? I will not have any debt other than the car payment, which is why I ask. Sorry for the confusion.
Thank you in advance.
Only the monthly payment. Your total monthly debt expenditure has to come under a percentage of your monthly income. They don't care about total amount owed on the car.
