So my wife has a car loan of $480 per month and I have a car lease of $350 per month. A friend of mine told me it’s nearly impossible to get a mortgage with those kinds of debts and loans. Do you guys think it’s true.
It depends on your income, other debts (credit card, etc.) and credit scores.
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Yeah, it’s all about the debt tj income ratio. Completely different story if you make 250k vs 60k. Go chat with a loan office at a local credit union. Best rates around, usually.
If I’m not mistaken, a loan shows on your credit differently then a lease. The loan will show as the entire remaining balance where the lease only shows the monthly payment as an obligation.
Someone please correct me if I’m wrong.
Also, if you have a lot of open lines of credit available, it can affect your ability to secure a loan. So that account you opened at Best Buy 10 years ago to buy a TV, even if it’s sitting with zero balance it could affect your credit.
Correct lease only show balance remaining on lease. There are many factors that go into determining if you qualify for a mortgage. Your debt to income ratio is main one along with credit history.
My understanding is, and this was told to me by a mortgage loan officer is if you have a large revolving credit and are on time with paying due amounts every month, you show trust with large credit loans. Your best bet is to simply plug in your living expenses along with income and credit card debt into a DTI calculator. Ideally banks wants your debt to income ratio (DTI) to be under 40%. With the current pandemic some banks require a credit score of 720+ and 20% downpayment.
Capital One and Citibank cards provide free credit scores from your account, if you have one. At the moment my lease comes up for the bulk of the payments remaining and not the MSRP of the car.
Also don’t buy/lease anything or open new credit accounts for at least 6 months before buying a property because that increased inquiry into your credit history will lower your overall credit score.
Impossible for the internet to answer this. But like others said it requires a big understanding of your financial history, cash on hand and overall debt to income ratio.
It is very easy to prequalify for the amount of mortgage you want. That can be done entirely online through most banks.
Multiple accounts weighs very little into your credit score and these days having more accounts open is better because your ratings are based on total utilization, average age of account, and number of total accounts. Having 10 credit cards you opened years ago and never use is great.
The old methodology of “close accounts you don’t use” has been out of date since around the 2008 recession where the risk models changed.
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All that matters is DTI.
You could have $3 billion a month in payments and it wouldn’t matter, as long as you have sufficient income and reserves for all of your existing obligations, plus the new mortgage/housing costs.
Looking from the other direction, if your income is too low you could have $0 in car payments and still not qualify for a mortgage.
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Is the friend in the mortgage origination industry? 
like everyone says, it’s income dependent along with a ton of other factors that underwriters take into consideration. Also consider this - do you now pay rent for where you live? If you’re now looking at replacing that rent payment with a mortgage, it’s a “like-for-like” replacement. This is a vast simplification (of course)… best bet is to start talking to some mortgage loan officers.
No, he is a loan officer for BMW FS or something like that. I didn’t know if it was true or not. Thanks for all your input
Hello,
I was wondering if anyone know how much BMWFS caps DTI, I think mine is pretty bad at 47.5%
WOW none of my business but maybe you shouldn’t be getting a BMW
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Definitely not getting that mortgage and shouldn’t be getting a new car.
Most definitely.
Just curious
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