If I buy a car right now, what exactly changes in my loan?

What happens to my mortgage if I buy a car?

You want to know how buying a car right now affects your mortgage loan approval. A car purchase changes your debt-to-income ratio and may lower your credit score, both of which lenders use to evaluate your loan.

Buying a car typically increases your monthly debt payments, which raises your debt-to-income ratio. Lenders compare your total monthly debt payments to your gross monthly income—most want this ratio below 43-50% depending on the loan type. The car loan payment gets added to this calculation. Additionally, the credit inquiry and new account can temporarily lower your credit score by a few points.

Check your current debt-to-income ratio by adding up all monthly debt payments and dividing by your gross monthly income. Calculate what the new car payment would do to this percentage. Also review your credit score and recent credit activity.

People in this situation commonly wait until after closing to buy the car, pay cash if they have sufficient funds remaining after the down payment and closing costs, or speak with their lender about how the purchase affects their specific loan approval. Share your car buying timeline with your lender and they can walk you through how the new payment impacts your loan qualification.