Profile picture for kborrud

How will a 2 year lease on a car affect my ability to get a mortgage?

I have just saved up enough for a downpayment on a new home (first time home buyer).  However, my car just completely died and no longer runs.  I am considering leasing, because I don't want a car loan to take away at money for my downpayment or  decrease my loan amount.  Will having a car lease decrease the amount that I would qualify for on a loan?  Would getting a lease hurt my credit score? How would leasing a car affect my ability to get a home loan?

  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
February 17 2011 - Redondo Beach
We think we've answered this question for you!
  • Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.
 
 

Answers (8)

Profile picture for user5211073
Hello everybody! My question is similar...We have enough for the down payment but we would like to change the car... We are currently paying a loan on it ($400) and we have a 1 1/2 year left to finish it. we would like to lease something for $400 too. Would starting a new lease affect us more since we would have more years of debt ahead?
Thx!!! 
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
June 04 2012
I agree with the suggestions offered. Buy an older car cash and enjoy your new home. If you are in the South Bay, I have a great referral to a reputable used car dealership. I will never buy a car anywhere else!
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
February 18 2011
You received some good advice. From those that responded I like the idea of renting a cheap car or buying a "beater." Both would not affect your credit score or your Debt-to-Income ratios.

Happy funding, Rudi
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
February 18 2011

If you decide to purchase a car in cash, then you won't have a car payment to worry about. Before you make a decision check out your down payment assistance options.  You may also want to see how taking out a down payment loan in addition to your mortgage payment will affect you.

Based on your income situation you may qualify for a grant or only partial repayment from the down payment assistance programs in your area. You can check with your local housing authority for additionial info.

You ability to qualify is subject to the abilities of your lender.  Depending on the program you may find a comfortable way to do both with the resources you already have

  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
February 18 2011

Unless you plan on having a car OR having a house then you need to figure out how both will work in your budget.  Make the best decision for you on a car and on buying a house.

  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
February 18 2011

Purchasing a car will most definately affect your debt to income ratio.  After reviewing your situation I would suggest taking a look at CALFHA .  This program can allow you to better weigh your options. 

CalHFA is a program for first time homebuyers.  This program can provide 100% financing, as well as down payment assistance options that may help you make the decision to buy that new car, or put what you have down on a new house.  Some options may even help you get a loan for your down payment that you can pay back at an interest rate you won't find anywere else.

Take a look at this link, and let me know if you have any questions.

http://www.calhfa.ca.gov/homebuyer/programs/index.htm



Hope this helps.

  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
February 18 2011
A leased car shows up on your credit report as like an installment loan in the amount of the total amount of the payments (ie. if the lease amount was $400/mo and for 24 months then the total amount is $9.6k).  With that, the $400/mo is now a monthly obligation for you and increases your Debt To Income (DTI) ratio and this can significantly effect the amount of your monthly payment capacity in the lender's eyes.  Further the $9.6k debt will decrease your credit score as it relates to your total outstanding debt to income ratios.  My suggestion would be to rent a car temporarily until you close escrow on a home... sometimes the lender thresholds make it tough but you may have the financial appetite to afford both.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
February 18 2011
A lease affects your score exactly the same as buying a car would. There is absolutely no difference, with the exception that a lease will probably result in lower monthly payments and thus not affect your DTI as much. This in no way means that I am suggesting leasing over purchasing a car, I am just answering your question. The bottom line is that if you buy/lease a car, it will affect your credit score somehow and the fact that it's a lease is irrelevant.

A suggestion: If you truly want to buy a home, and you are that strapped credit-wise and cash-wise, you may be better off buying a beater and driving that for a bit and saving a bit longer so you don't get in over your head. What happens after you buy and it's the water heater that dies, or the AC?  

You don't sound ready to buy.

  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
February 18 2011
 
Related Questions
low down jumbo loan options?
Profile picture for Jeremy  Harrison
Latest answer by Jeremy Harrison
September 01 | 11 answers
How will a 2 year lease on a car affect my ability to get a mortgage?
Profile picture for user5211073
Latest answer by user5211073
June 04 2012 | 8 answers
  • Asked by kborrud
  • In Mortgage
  • February 17 2011
Need Lender for 30 yr fixed for 728K. Combining 1st/2nd. Great FICO n rsvs
Profile picture for Brian GFL Capital
Latest answer by Brian GFL Capital
May 02 2012 | 2 answers
what is current mortgage rates?
Profile picture for John Paunan
Latest answer by John Paunan
March 30 2011 | 25 answers
How many days from Appraisal report to Loan Approval?
Profile picture for Denise Lavell
Latest answer by Denise Lavell
February 17 2011 | 5 answers
  • Asked by malnik
  • In Mortgage
  • February 15 2011
Mortgage Rates
 
Be A Good Neighbor

Zillow Advice depends on each member to keep it a safe, fun, and positive place. If you see abuse, flag it. More on our Good Neighbor Policy.

Homes for Sale
  1. 5416 Calle Mayor, Torrance, CA Home For Sale
    5416 Calle Mayor, Torrance, CA 90505

     For Sale: $1,250,000

    • Beds: 4
    • Sqft: 3152
    • Baths: 4.0
    • Lot: 9539
  2. 1740 Havemeyer Ln, Redondo Beach, CA Home For Sale
    1740 Havemeyer Ln, Redondo Beach, CA 90278

     For Sale: $899,500

    • Beds: 3
    • Sqft: 1854
    • Baths: 3.0
    • Lot: 2482
  3. 4575 W 172nd St, Lawndale, CA Home For Sale
    4575 W 172nd St, Lawndale, CA 90260

     For Sale: $499,000

    • Beds: 4
    • Sqft: 1492
    • Baths: 2.0
    • Lot: 5793