This blog is for educational purposes only, not an offer of credit or advertisement for current loan terms. It does not provide legal advice. Refer to our loan web pages or consult professional advisors for specific information.
Deciding whether to buy a car or a house first is a major financial decision.
Both will impact your credit score, debt-to-income ratio (DTI), and overall financial stability.
While some people need reliable transportation right away, others prioritize securing a long-term investment in homeownership.
This guide will help determine which purchase should come first based on your financial situation, lifestyle needs, and market conditions. Plus, we’ll show how MIDFLORIDA Credit Union can help finance both when the time is right.
Apply for a home mortgage or an auto loan today with MIDFLORIDA.
Assessing your immediate needs
Before deciding whether to buy a car or a house first, it's important to consider your current lifestyle and financial situation:
- Do you need a car for work or daily life? If public transportation isn't an option where you live or your current vehicle is unreliable, a car may be a top priority.
- Are you in a stable housing situation? If your rent is high or unpredictable, homeownership could provide long-term financial benefits—and help soften a stressful situation.
- How soon do you plan to buy a house? If homeownership is a near-term goal, taking on an auto loan could make it harder to qualify for a mortgage.
Your most pressing financial needs should guide your decision.
Financial factors to consider
Credit score and loan eligibility
Your credit score and DTI ratio affect loan approvals for both cars and homes:
- Buying a car first increases your DTI, potentially making it harder to qualify for a mortgage.
- Buying a house first impacts your credit utilization, which may limit your ability to finance a car in the short term.
If you plan to buy a house soon, avoiding additional debt—such as an auto loan—may improve your mortgage eligibility.
Down payment and savings
Saving for a house typically takes longer than saving for a car:
- Home down payments: 3%-20% of the home price (e.g., $9,000-$60,000 on a $300,000 home).
- Vehicle down payments: 10%-20% of the vehicle price (e.g., $3,000-$6,000 on a $30,000 car).
If homeownership is your priority, focusing on saving for a down payment may be more important than financing a car.
Total cost of ownership
Beyond the purchase price, consider ongoing costs:
| Expense | Home | Car |
| Loan Payments | Mortgage | Auto Loan |
| Insurance | Homeowners Insurance | Auto Insurance |
| Maintenance | Repairs, Property Upkeep | Repairs, Oil Changes |
| Taxes and Fees | Property Taxes, HOA Fees | Registration, Fuel |
A home typically appreciates in value, while a car depreciates over time.
Market conditions and timing
Mortgage rates vs. auto loan rates
- Mortgage rates: Most predictions for 2025 say mortgage rates will remain in the middle of six percent for the foreseeable future.
- Auto loan rates: Car loans have higher interest rates than mortgages but shorter terms, meaning less interest paid over time.
If mortgage rates drop, homeownership may become more affordable, making it wise to wait on a car purchase.
Housing and auto market trends
- Rising home prices: If home values increase, buying a house sooner may help you secure a lower price.
- Car shortages or price drops: If vehicle prices are inflated due to supply chain issues, waiting may be wise.
Paying careful attention to market trends can help you make a financially sound decision.
Long-term financial implications
Homeownership as an investment
Homeownership enables you to build equity and gain from property appreciation over time. Unlike a car, which depreciates, a home generally increases in value, making it a popular option for a long-term investment.
Car depreciation
A car loses value quickly:
- A new car loses 10%-20% of its value in the first year
- After five years, most cars retain only 40%-50% of their original value
Because a car depreciates, buying a home first is often the better financial decision for many Americans—unless your transportation needs demand otherwise.
When it makes sense to buy a car first
While homeownership is a strong financial goal, buying a car first may be the right decision if:
- You need reliable transportation for work, and public transit isn’t an option.
- Your car is at the end of its lifespan, and repair costs exceed its value.
- You need to build credit before applying for a mortgage—an auto loan, when managed well, can improve your credit score.
- The housing market is unfavorable, with rising home prices or mortgage rates making homeownership less affordable in the short term.
When It Makes Sense to Buy a House First
If homeownership is your primary goal, buying a house before a car may be smarter.
Consider this approach if:
- You have reliable transportation, meaning replacing your car is unnecessary.
- You want to build equity and benefit from long-term financial stability.
- Home prices are rising, making buying sooner rather than later beneficial.
- You’re focused on mortgage approval—taking on an auto loan before you've applied for a mortgage can increase your DTI ratio, making it harder to qualify.
How MIDFLORIDA can help with both
Whether you buy a car or a house first, MIDFLORIDA offers financing solutions tailored to your needs.
Auto loans
- Competitive rates and flexible terms
- Financing for new and used vehicles
- Use the auto loan calculator to estimate payments
Mortgage loans
- Loan programs for first-time and repeat homebuyers
- Options with low down payments and no PMI
- Use the mortgage calculator to estimate affordability
With MIDFLORIDA, you don’t have to choose between a car or a house—you can finance both with confidence
So, should you buy a car or house first?
Deciding whether to buy a car or a house first depends on:
- Your financial situation and priorities
- Market conditions for both homes and vehicles
- Your ability to manage debt and loan approvals
General Guidelines:
- Buy a car first if you need reliable transportation or want to build credit before homeownership.
- Buy a house first if long-term wealth-building is your priority and you already have stable transportation.
Regardless of your decision, MIDFLORIDA can help with auto loans and mortgages.
Ready to finance your next big purchase?
Start your application with MIDFLORIDA today:
