Car Loan? Get a Home Loan Approved Fast (2026)

Securing a home loan while managing an existing car loan can seem daunting. The fear of rejection or being overwhelmed by debt is real, especially when you're already juggling financial commitments. But don't worry; it is indeed possible to get a home loan even if you have a car loan. By understanding how lenders assess your financial situation and what steps you can take to improve your chances, you can achieve your dream of owning a home.

Understanding Home Loans and Car Loans

When considering a home loan application, lenders assess your financial health to determine your ability to repay the loan. Car loans, being a form of debt, factor into this equation. Essentially, lenders will look at your debt-to-income ratio, which is a measure of your total monthly debt payments compared to your monthly income. A car loan increases your monthly debt obligations, which could impact your borrowing capacity for a home loan.

In Australia, home loan interest rates in 2026 generally range from 6.49% to 8%, depending on your credit profile and the lender. Car loans, on the other hand, might range from 7% to 12%. The key is to ensure that your total monthly debt repayments are manageable within your income. This will reassure lenders that you can handle the additional responsibility of a home loan.

Rates, Requirements, and Options

Lenders typically consider several factors when evaluating a home loan application with an existing car loan:

• Credit Score: A higher credit score increases your chances of loan approval and may offer you better interest rates.
• Debt-to-Income Ratio: Lenders prefer a ratio below 30-40%. A high ratio might limit your borrowing capacity.
• Loan-to-Value Ratio (LVR): The LVR is the loan amount compared to the property's value. Lenders generally prefer an LVR of 80% or less, which means you need to save for a 20% deposit.
• Employment Stability: Consistent employment history is crucial. Lenders need assurance of your ability to meet repayments.

With over 83 lenders on our panel at Esteb and Co, we can help you find competitive rates and terms tailored to your financial situation.

Steps to Getting a Home Loan with a Car Loan

Here's a step-by-step guide to improve your chances of securing a home loan while managing a car loan:

1. Assess Your Financial Situation: Calculate your debt-to-income ratio and determine your borrowing capacity.
2. Improve Your Credit Score: Pay bills on time, reduce existing debts, and avoid applying for new credit.
3. Save for a Deposit: Aim for at least a 20% deposit to improve your LVR and increase lender confidence.
4. Consider Refinancing the Car Loan: Refinancing may reduce your monthly repayments, improving your debt-to-income ratio.
5. Consult a Mortgage Broker: At Esteb and Co, our experienced brokers can guide you to the most suitable options from our 83+ lenders.
6. Submit a Strong Application: Provide all required documents, including proof of income, employment history, and a detailed budget plan.

Expert Tips and Considerations

Here are some expert tips to keep in mind:

• Check for Hidden Fees: Be aware of potential application fees, lender’s mortgage insurance (LMI), and other costs associated with home loans.
• Maintain a Consistent Savings Habit: Regular savings demonstrate financial discipline to lenders.
• Stay Informed About Market Changes: Interest rates and lending policies can change, so keep abreast of the latest developments.
• Be Honest and Transparent: Accurately disclose all existing debts and financial commitments in your loan application.
• Prepare for Interest Rate Increases: Ensure your budget can accommodate potential rate hikes in the future.

Frequently Asked Questions

• Can I refinance my car loan to improve my home loan application? Yes, refinancing your car loan can lower monthly repayments, improving your debt-to-income ratio and enhancing your home loan application.
• What if my credit score isn’t high enough? Work on improving your credit by paying off debts, making timely payments, and consulting with a broker for advice.
• How much deposit do I need for a home loan? Generally, a 20% deposit is recommended, but some lenders may accept less with lender’s mortgage insurance.
• Is it possible to consolidate my car loan with my home loan? Some lenders offer home loan packages that allow debt consolidation, but it's essential to evaluate if this is beneficial for your situation.
• What documents will I need for a home loan application? You'll need proof of identity, income, employment details, credit history, and an outline of your expenses and debts.
• Can I get a home loan if I’m self-employed? Yes, though it may require additional documentation, such as tax returns and financial statements.

At Esteb and Co, we understand that managing multiple loans can be challenging. Our team is dedicated to finding the best home loan solutions for you from our extensive panel of lenders. If you have any questions or need personalised advice, don't hesitate to reach out to us.