So here is the scenario: You and your partner work hard on maintaining your good credit. You save up for a down payment. You land great jobs with large salaries. But right before you start shopping for your first home, you buy a new car.

Does that car affect your buying power or even your ability to get a home loan? Yes it does! Mortgage banks will derive at your ?buying power? by dividing your monthly credit expenses into your monthly income. Part of the monthly credit expenses includes your car payment.

In fact, these lenders don?t even care about the balance of the new car loan or its interest rate. When a car payment exists, the amount of that payment reduces the amount that could have been used for a house payment.

As a rule of thumb, a $500 car payment is equivalent to a $100,000 mortgage loan balance. Since getting a home loan can be trickier than a car loan, sometimes it may pay off to hold off on that new car until after you buy your new home.