Advice needed - timing car purchase with mortgage application

I don’t currently own a car and am planning on buying a house in the next 12 months in an area that requires a car. What method of acquiring a car would have the least impact on my potential mortgage application? From my understanding, leasing or financing a car would show as a new form of debt on a credit check. Alternatively, I have enough cash on hand to buy a used car outright, but I’m hesitant to eat into the money I’ve saved up for down payment + closing costs.

They pull your credit before closing. If a new debt is incurred, it can impact your debt-to-income ratio and your score. You never buy a car in the process of buying a house. It lowers your buying power and possible approval. I saw this all the time when I did loans. Speak to your loan officer to run scenarios of acquiring more debt in the process. They will always advise against it. Even a low car payment of around $400 can lower your buying power by over $100,000. Just get the house first, then worry about your car, or buy a car with cash for as little as possible to get you around. You can always sell it and then get the car you want later. In mortgages, debt-to-income and your score is king. You need to protect it.

We had to buy a car in December and a house in May. That was far enough apart it didn’t matter. I’d do it before 6 months if at all possible or wait until after closing. It counts against your DTI, so if you’re close on that, be aware.

@Rylan
Did you buy it outright or did you finance the car purchase?

Wei said:
@Rylan
Did you buy it outright or did you finance the car purchase?

We financed because it was 0%; otherwise, we would have paid cash. We just used the cash for the house down payment instead.

Don’t ever lease a car. It’s one of the worst decisions you can make.

Chen said:
Don’t ever lease a car. It’s one of the worst decisions you can make.

Eh. Some people can write it off. Some people are okay paying several hundred dollars a month forever to always have a new car and never really worry about maintenance other than oil changes.

Is it the best way to spend money? No, but for those who can afford it, leasing is just another cost of living type payment. Some people buy expensive gym memberships, some go on lavish vacations, other people lease cars.

@Quin
Hey, I know that. I FIRED early and can afford all of that. But you only get a portion of the lease payment back through the tax reduction. Leasing is always stupid unless your company is paying. I get a new car every two or three years. But I don’t lease it. I pay cash. And FYI… you still pay maintenance on a leased car for things such as tires.

IF your debt ratio is going to be close, absolutely do not buy a car first. Or pay cash for a 10-year-old car.

Leasing or financing a purchase are the same - the lender looks at the monthly payment.

I bought my house in September and my car in April. Financed both.

Teo said:
I bought my house in September and my car in April. Financed both.

Did financing the car 5 months before you bought the house materially impact your mortgage application?

Wei said:

Teo said:
I bought my house in September and my car in April. Financed both.

Did financing the car 5 months before you bought the house materially impact your mortgage application?

The house was first.

Wei said:

Teo said:
I bought my house in September and my car in April. Financed both.

Did financing the car 5 months before you bought the house materially impact your mortgage application?

I had zero down on the house and put 10k on the car.

I have always leased because I get a new car every 3 years. It would be stupid to buy every 3 years; it would cost way more in monthly payments. If you trade your car regularly, it’s best to lease.