Would Leasing a vehicle effect me from being approved for a home?

Question

Hello, For a few years now i was not able to be approved for a Loan to purchase my first home because of a high car loan. I no longer have this vehicle in my possesion and am not held responsible for the car loan anymore. However, i was curious to find out if i decide to lease a vehicle for a few years if this has the same effect of having the prior car loan? Would i be in the same situation as before. Any info would help.

Heather

Steve Vaughan · Answer

Fleecing, I mean leasing, a vehicle is the most expensive way to have one.  Some do it as a tax strategy with their business, but overall it's a bonehead move if you want to build wealth.  You are renting a car with high penalties and a lot of rules.  What???

Third times a charm.  You've borrowed for a car. What happened to that 'equity'?  LOL Now you are considering leasing a car.  Let us know when you decide to buy a functional good enough used car outright and we will celebrate with ya @Heather Chavez!

Jonathan Jaime Velarde · Answer

Having any type of re-occuring monthly payment will impact your credit for the most part (good and bad) especially if your debt to income ratios don't suffice for the property you are looking to acquire.

My advice is buy a reliable, fuel efficient care that will get you from A to B so you can start saving up more monthly to put towards investing.

Once, you start raking in the passive income then you can reward yourself with a newer vehicle.

That is my outlook on vehicles. The second you drive them off the lot they are OLD. I bought a truck for $30,500 and it is paid off and AMAZING, but I would much rather have $20K cash and a few thousand dollar car looking back.

Andrew B. · Answer

the monthly lease payments would count against you, but I imagine they would be less than the monthly payments of a financed vehicle. My advice is buy a used car

Shaun Weekes · Answer

It would count against your DTI.  However, depending on your income and other debt you might still qualify for a loan.  You just need a good loan officer or Broker to run the numbers for you.

Harjeet Bhatti · Answer

Car loan installment will be count in your DTI whether its loan or lease.

Nicholas Covington · Answer

@Heather Chavez Hello!

Short answer is yes depending on your other debts and your income level, leasing a vehicle can prevent your from being approved.

What I run into quite often, even though we tell our clients not to, is that during their loan process they will go buy/lease a car or some other high balance item and go over their debt to income limit.

If you lease a car before you apply for a home loan and it shows on the credit, and your are approved with that debt you are fine. It when you are right on the cusp and then do it during the loan process and then go over the limit.

We will pull credit multiple times during the process to make sure everything is in line so seeing a new trade item with a high (or any amount) payment does not bode well.

Nick

Would Leasing a vehicle effect me from being approved for a home?

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