For many people, having a new vehicle and having a home of their own may no longer be an option without proper planning.

The times have changed. Here is what you need to know and keep in mind when you are exploring holding down a mortgage as well as owning a vehicle.

In 2016 the mortgage game changed. You now require significantly more income and less debt to qualify for a home purchase.

As a mortgage professional, I often hear the words, “I needed to buy this car to build my credit rating” or “I needed a car to get to work and the kids to school.”

While these are good reasons to take on a car loan, do not let this justify you taking on a car payment that will cripple you from the more important things!

Payments that are too large and difficult to manage will directly take away of the maximum mortgage amount you can be approved for.

If you feel you need to take on a larger vehicle payment, you may want to delay that purchase until after you have purchased your home.

Alternatively, plan to pay off that vehicle loan before you set your sights on your dream home.

If neither of these are options for you, there is also a 3rd option which is likely the best for your overall financial picture which I will explain. Stay with me!

Vehicle loans can help build credit. By making consistent payments on a vehicle loan you do build a track record of being a reliable borrower. However, if you take on too large of a payment, you may have a great credit rating, but may be declined for the home you want because your car payments are too unwieldy large.

Keep in mind that you will build the same credit rating with a $350 payment as you will with a $650 payment. The only difference is by taking the $350 payment you can buy a home worth as much as $50,000 more. And you can also get to work and get your kids to school in a great pre-owned vehicle.

If you need a vehicle and you want to buy a home, buy a less expensive vehicle. Avoid the loan and pay with cash if you can, or take on a loan with a smaller payment and be consistent on your payments.

Don’t get caught up in the feeling of buying a “new” car until you have consulted with a mortgage professional.

Justifying that large car payment because “I needed a vehicle ” is not going to be a reason for a bank to approve the mortgage when you also want to buy your home.

The bank will not bend on these rules, so it is up to you to make a plan, take the emotion out of it, and decide what you want more.