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I, like a lot of loan originators and real estate agents, see this question asked and answered often too late to change the outcome. It can happen to anyone in the home buying market, a new buyer or a move up buyer.  What comes first, the car or a house? One of the biggest obstacles in getting home financing is having an acceptable debt to income ratio, particularly for first time buyers.


I often speak to someone who is interested in buying a home, but they just bought a car or signed onto a four, five or six year contract to pay for a car. When I am dealing with a couple that can often mean two cars. It is not unusual for two vehicles to have payments of $800 month.  For a buyer with income in the $3500/month range this constitutes 23% of their available debt to income.  Working with an overall debt to income (dti) of 45% this would leave a mere $770/month for all other debt including the home they want to buy.


Now if the home buyer finds a home they can buy for $770 which includes taxes, insurance, pmi, home association fees, etc., then great! And great if they  have zero other debt besides the car in some markets this just might fill the bill.

If, on the other hand the home buyer has other debt besides the car it can eliminate the opportunity to buy a home until the car is paid off or nearly paid off, which can be as long as five or six years. So, when faced with the question of a car or a house, please consider the house first. You can most likely buy a car after buying a house, or would be forced into the car you can afford. Putting off  home ownership can be costly. 


Comment balloon 2 commentsDora Griffin • August 27 2015 12:08PM


Hopefully people think house first, but people do get tempted by cars and those car guys/gals are such good sales people. Sometimes it puts of that house another year. I see it all the time.

Have a great weekend!

Posted by Stefan Winter, Owner - Winter Group & Real Estate Web Tech (Real Estate in IL & NV | Owner of Real Estate Web Tech | Daily Vlogger) over 3 years ago

Stefan, thanks for the post. With rates as low as they are today putting off buying for several years is more costly.

Posted by Dora Griffin, NMLS 6380 (D A Griffin Financial.LLC) over 3 years ago