Mortgage  Question?
Can you qualify a mortgage if your car was repossessed?

Can you qualify for a mortgage if your car was repossessed within the past year?

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

Having a car repossessed does not automatically disqualify you from getting a mortgage but it can make it more challenging. According to industry guidelines, if you are buying a single family property such as a home or condominium you are not required to pay off outstanding collections or non-mortgage charge-offs, including a claim related to a car loan, regardless of the amount. Some lenders may impose stricter borrower qualification requirements above and beyond these industry guidelines but you should be able to find a lender that is willing to work with you as long as you qualify for the mortgage based on your employment history, debt-to-income ratio and credit score.

The car repossession, however, can indirectly make it harder for you to qualify for a mortgage if it harms your credit score. Lenders require borrowers to meet a minimum credit score requirement and a car repossession can negatively impact your score. We recommend that you review your credit report before you apply for a mortgage to identify and address any issues. You can access your credit report for free on websites like, or We also provide a detailed explanation of your credit score and the mortgage process on FREEandCLEAR.

Reviewing your credit report should also enable you to identify if there is an outstanding claim or collection from your car loan lender. If the car loan lender sold your repossessed car for less than the outstanding balance of your loan the lender may be able to file a claim that requires you to pay the difference. Any claim or collection by the car loan lender should appear on your credit report. If you have a claim or collection, you can decide to repay it although you are not required to do so according to the mortgage industry guidelines outlined above. Paying the claim, however, can positively impact your credit score over time. If a claim or collection does not appear on your credit report then there is no need for you to further address the issue.

Finally, we always recommend that you contact multiple lenders to understand how they would handle your unique situation. You can review lenders in your area by clicking INTEREST RATES We advise you to contact at least four lenders as as qualification guidelines vary. Plus, comparing lenders is the best way to save money on your mortgage.

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR. More about Harry

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