How rising car prices present one more hurdle for homebuyers Car prices keep soaring – the average price of a new vehicle topped $50,000 for the first time last year, and the share of Americans taking on $1,000 monthly car payments passed 1 in 5, also a record. If you’re considering a new car loan while also hoping to buy a home, you might want to think again: A hefty car payment can hinder your ability to qualify for a mortgage. “Higher car payments eat directly into the residual income available for a mortgage payment,” says Anthony O. Kellum, CEO of Kellum Mortgage in Roseville, Michigan. Ever-rising car payments are just part of the affordability squeeze that has gripped the U.S. housing market since the pandemic. Home prices have soared to record levels, and the typical age of first-time buyers has risen to 40, a record. “You never know which straw will break the camel’s back,” says Robert Brusca, chief economist at FAO Economics. “But it’s all in the mix – high car payments, high house prices, higher mortgage rates, high student debt levels.” In other words, it’s not an easy environment in which to buy a home. Saddling yourself with a hefty car payment ahead of applying for a mortgage could make your process even more difficult. ‘It feels overwhelming’ The average price of a new car topped $50,000 for the first time in September , according to Kelley Blue Book, driven by better quality, longer-lasting cars as well as the popularity of electric vehicles. According to Edmunds, the average new car payment for loans originated in the fourth quarter of 2025 was $772. And the share of new-car buyers committing to monthly payments of $1,000 or more reached a record high of 20.3%, up from 18.9% a year