Car Loan? Secure a Home Loan Fast (2026 Guide)

Are you dreaming of owning your own home but worried about your existing car loan? You're not alone. Many Australians find themselves in this situation, questioning whether it's possible to secure a home loan while juggling existing debts. The good news is, yes, you can get a home loan with a car loan, but there are some important factors to consider to make it work in your favour.

Understanding Home Loans and Car Loans

Before diving into the specifics, it's essential to understand the dynamics of both home loans and car loans. Home loans are typically larger, long-term commitments with interest rates in the range of 6.49% to 8.5% as of 2026, depending on the lender and your financial situation. Car loans, on the other hand, are smaller, short-term loans with interest rates ranging from 6% to 12%.

Your existing car loan can impact your ability to take on a home loan because lenders will assess your overall financial health, including your existing debts, income, and credit score. Understanding these factors can help you prepare and position yourself better when applying for a home loan.

Key Information: Rates, Requirements, and Options

When applying for a home loan with a car loan, lenders will evaluate your Debt-to-Income (DTI) ratio, credit score, and repayment history. Generally, lenders prefer a DTI ratio below 30%, and a good credit score (generally 620 or higher) can significantly improve your chances of approval.

Here's a breakdown of what you need to consider:

Esteb and Co, with access to over 83 lenders, can help you find the most suitable option tailored to your financial situation, ensuring you secure the best deal possible.

Steps to Secure a Home Loan with a Car Loan

Here's a step-by-step guide to help you navigate the process:

1. Assess Your Financial Situation: Calculate your DTI ratio and ensure it's within an acceptable range. Review your credit score and make improvements if necessary.
2. Improve Your Financial Health: Pay off as much of your car loan as possible, or consider refinancing it to reduce monthly payments.
3. Seek Pre-Approval: Contact a mortgage broker, like Esteb and Co, to explore your options and get pre-approval from lenders.
4. Prepare Documentation: Gather all necessary documents, including proof of income, expenses, and details of your car loan.
5. Submit Your Application: With the help of your mortgage broker, submit your application to lenders who offer favourable terms.
6. Review Offers: Once you receive offers, compare them carefully, paying attention to interest rates, fees, and terms.
7. Finalise Your Loan: Choose the best offer and complete the paperwork to secure your home loan.

Tips and Considerations

Here are some expert tips to help you successfully manage a home loan with a car loan:

• Maintain a Good Credit Score: Regularly check your credit report and resolve any discrepancies promptly.
• Stay Within Your Budget: Set a realistic budget for your home purchase that considers your car loan repayments.
• Consider Loan Consolidation: If possible, consolidate your debts to simplify repayments and potentially reduce interest rates.
• Be Transparent: Be honest about your financial situation with your mortgage broker to find the best solutions.
• Negotiate: Don't hesitate to negotiate terms with lenders to secure a better deal.

Frequently Asked Questions

1. Can having a car loan affect my home loan approval?
   Yes, a car loan can impact your debt-to-income ratio, which lenders consider during home loan approval.
2. Should I pay off my car loan before applying for a home loan?
   While it's not necessary, reducing or paying off your car loan can improve your financial profile and increase your chances of approval.
3. What is the ideal debt-to-income ratio for a home loan?
   Lenders typically prefer a debt-to-income ratio below 30% for home loan applicants.
4. How can Esteb and Co assist with securing a home loan?
   With access to 83+ lenders, Esteb and Co can provide tailored advice and help you find the best loan options.
5. Is it possible to refinance my car loan to qualify for a home loan?
   Yes, refinancing your car loan can lower your monthly repayments, potentially improving your debt-to-income ratio.
6. Can I include my car loan in my home loan?
   Some lenders offer debt consolidation options that allow you to combine your car loan with your home loan, subject to eligibility.
7. How long does the home loan approval process take?
   Typically, the process can take anywhere from a few weeks to several months, depending on your financial situation and the lender's criteria.