Roll a Car Loan Into Your Mortgage? What It Really Costs

Yes, you can roll a car loan into your mortgage through a cash-out refinance, a home equity loan or a home equity line of credit (HELOC). For most homeowners in 2026, however, it costs more in total, especially if your current mortgage rate is well below today’s. Your monthly bill may drop, yet you could end up paying for the car for decades.

The answer depends on your mortgage rate, your car loan rate and how long you would carry the debt. Below are the ways to combine a car loan with a mortgage, a worked example, the risks and the cases where it can still make sense.

Three ways to roll a car loan into your mortgage

All three options borrow against your home equity, which is your home’s value minus what you owe on it. The main difference is what happens to the mortgage you already have.

Cash-out refinance

A cash-out refinance replaces your whole first mortgage with a new, larger loan, and the extra cash pays off the car. Fannie Mae and FHA both cap a cash-out refinance on a one-unit primary home at 80% loan-to-value (LTV), which is the loan amount divided by the home’s value. Fannie Mae also generally requires the mortgage you pay off to be at least 12 months old. Our cash-out refinance guide covers the full requirements.

Home equity loan

A home equity loan is a second mortgage that pays you one lump sum. It usually has a fixed rate and a set term. Your first mortgage and its rate stay in place, and each lender sets its own limit on how much you can borrow across both loans.

HELOC

A HELOC is a revolving credit line secured by your home. You draw what you need, and the rate is usually variable, so your payment can change. Like a home equity loan, it leaves your first mortgage alone. See HELOC vs. home equity loan for the differences, and cash-out refinance vs. HELOC to compare both with a refinance.

Lenders price these three products differently, so compare offers for the option that fits your mortgage before you decide.

A cash-out refinance reprices your whole mortgage

The car loan is a small slice of your total debt. Yet if you roll a car loan into your mortgage with a cash-out refinance, your entire mortgage balance moves to today’s rate. Freddie Mac’s Primary Mortgage Market Survey (PMMS) put the average 30-year fixed rate at 7.32% on Oct. 22, 2026, up from 6.19% a year earlier.

A real cash-out quote is often higher than that average. Fannie Mae adds loan-level price adjustments (LLPAs), which are pricing charges based on credit score and LTV, to many cash-out refinances. Freddie Mac charges similar cash-out credit fees. The examples below still use the 7.32% average, so an actual quote could look worse.

All payments are principal and interest only. They leave out property taxes, homeowners insurance and mortgage insurance. The 8.0% car loan rate is a hypothetical example.

Scenario A: an older mortgage at 3.5%

Say you owe $250,000 at 3.5% with 25 years left. You also have a $25,000 car loan at 8.0% with 48 months left.

The new loan costs $27.18 more each month than both loans cost now. It also carries about $275,300 more interest, partly because it runs five years longer. In addition, you would need a home worth at least $343,750 to stay within the 80% LTV cap.

Closing costs make it worse. If you roll in 3% ($8,250), the loan grows to $283,250 and the payment rises to $1,945.73.

Scenario B: a recent mortgage near today’s rates

Now say you owe $250,000 at 7.0% with 28 years left. That payment is $1,699.02, or $2,309.34 a month with the same car loan.

A $275,000 cash-out refinance at 7.32% over 30 years costs $1,889.06 a month. That is $420.28 less each month for the next four years. After that, however, the car loan would have ended on its own. From then on, you pay $190.04 more per month than the mortgage alone would cost, for 26 more years.

In total, interest rises by about $79,900. On top of that, closing costs add about $8,250 at 3%.

What the car’s share costs on its own

Look at the $25,000 by itself. Spread over 30 years at 7.32%, it costs $171.73 a month and $36,824 in interest. By comparison, the car loan you already have would cost only $4,296 more in interest over its last four years. The lower payment comes from stretching the debt, while the rate barely changes.

Closing costs and the break-even test

Freddie Mac tells consumers to expect refinance closing costs of 3% to 6% of the loan principal. On a $275,000 cash-out refinance, that range is $8,250 to $16,500. Your lender, credit score and location set the final number. Our guide to how much it costs to refinance breaks down the fees.

To find your break-even, add up the interest and fees on each path over the time you would actually keep the loans. Then compare the totals. A lower monthly payment alone does not show whether you come out ahead, and is refinancing worth it walks through the same test.

Car loan rates vs. mortgage rates in 2026

The Federal Reserve’s G.19 consumer credit release tracks what commercial banks charge on new car loans. The average rate on a 60-month new car loan was 7.54% in August 2026, a preliminary figure released Oct. 7, 2026. That is only 0.22 percentage points above the 7.32% PMMS average for a 30-year mortgage on Oct. 22, 2026.

With a gap that small, a cash-out refinance rarely lowers your rate by much, especially after cash-out pricing. Your own rate depends on your credit, the car and the lender, so check your loan statement for the actual rate and months left.

Risks of using home equity to pay off a car loan

• You finance a fading asset for decades. A car loses value every year. On a 30-year mortgage, you could still be paying for this car long after it is gone.
• Your home secures the debt. Miss car payments and the lender can repossess the car. Miss mortgage payments and your home is at risk instead.
• Less equity for your next move. Every dollar you borrow lowers what you keep when you sell and what you can put toward the next down payment.
• The 80% LTV cap. Fannie Mae and FHA cash-out refinances stop at 80% LTV, so a homeowner with less equity may not qualify.
• You must qualify again. A new loan means a credit check, income documents and a fresh look at your debt-to-income ratio (DTI). The car payment goes away, but the larger mortgage payment counts in its place.

When it can make sense to roll a car loan into your mortgage

Rolling a car loan into your mortgage can work in a few narrow cases.

• A HELOC or home equity loan at a lower rate. Both keep your low first mortgage in place. This works when the new rate is below your car loan’s rate and you repay the balance within the car’s remaining term or sooner.
• A short-term cash-flow emergency. In Scenario B, the cash-out refinance frees up $420.28 a month, or about $20,173 over four years. However, it costs about $79,900 more in interest plus closing costs. That trade can beat missed payments, but it is expensive.
• You were going to refinance anyway. If you can refinance the whole mortgage to a rate lower than your current one, adding the car balance may cost little extra.

Whichever path you choose, keep paying the car’s old payment toward the new balance. For example, sending an extra $610.32 a month to principal would repay a $25,000 share at 7.32% in about four years. See how to pay off your mortgage early for ways to set this up.

If one of these cases fits you, compare current offers from several lenders.

Car loan interest in a mortgage is usually not tax-deductible

IRS Publication 936 allows the deduction only on home-secured debt used to buy, build or substantially improve the home that secures it. Cash you take out to pay off a car does not qualify, whether it comes from a cash-out refinance, a home equity loan or a HELOC. You also must itemize on Schedule A to deduct any mortgage interest, so ask a tax adviser before you count on a tax break.

Options to try before you tap your home equity

Refinance the auto loan itself. If rates or your credit have improved since you bought the car, a bank or credit union may offer a lower rate. Keep the term the same or shorter so you don’t stretch the debt.

Pay extra toward the car loan. Extra principal payments shorten the loan and cut interest. First, ask your lender whether the loan has a prepayment penalty.

Sell or trade for a cheaper car. If the payment itself is the problem, a less expensive car lowers it for good, especially when the car is worth more than you owe.

Know what a cash-out auto refinance is. A cash-out auto refinance is a new car loan for more than you owe, so you borrow against the car’s value. Despite the name, it has nothing to do with your home or a mortgage cash-out refinance. It adds debt to a depreciating asset, so treat it with the same caution.

Should you pay off your car loan or mortgage first?

Put extra money toward the higher-rate debt first. For a homeowner with a 3.5% mortgage and an 8.0% car loan, that is the car. Each extra dollar there saves more interest than the same dollar on the mortgage. It also frees up the whole car payment once the loan ends.

Before you prepay either loan, though, keep an emergency fund. Extra payments do not lower next month’s required payment, so cash in the bank protects you better during a job loss.

If you plan to buy a home soon, the car payment matters even more. Lenders count it in your DTI, so a large car payment can lower the amount you qualify to borrow. For the same reason, avoid a new car loan while a mortgage application is in progress. Our guide on why not to buy a car during a mortgage application explains the timing.

Credit card debt follows the same math

Card balances work the same way as when you roll a car loan into your mortgage, with a much bigger rate gap. The Federal Reserve’s G.19 release put the average rate on credit card accounts assessed interest at 22.36% in August 2026 (preliminary). The same risks apply, though: you stretch short-term debt over many years and put your home behind it.

Many borrowers also run the cards back up, which leaves them with the larger mortgage and new card balances. Our home equity debt consolidation guide covers this in depth.

Frequently asked questions

Can you roll a car loan into your mortgage?

Yes. You can roll a car loan into your mortgage with a cash-out refinance, home equity loan or HELOC if you have enough equity and qualify. Fannie Mae and FHA cash-out refinances on a one-unit primary home cap the loan at 80% of the home’s value.

Should I use home equity to pay off my car loan?

Usually only if the new rate is lower and you repay the balance on the car’s schedule or faster. A HELOC or home equity loan keeps your first mortgage rate, so it tends to cost less than a cash-out refinance when that rate is low.

Can I refinance my mortgage and auto loan at the same time?

Yes. A cash-out refinance can pay off the auto loan and fold it into one new mortgage. Alternatively, you can refinance the auto loan separately with an auto lender and leave your mortgage untouched.

Is it better to pay off my car or my mortgage first?

In most cases, pay off the higher-rate debt first, which is often the car loan. Keep an emergency fund, and remember that the car payment counts in your DTI if you plan to apply for a mortgage soon.

Is car loan interest tax-deductible if it’s in my mortgage?

Generally, no. IRS Publication 936 limits the deduction to home-secured debt used to buy, build or substantially improve the home, and you must itemize. A tax adviser can confirm how the rule applies to you.

Your next step

Rolling a car loan into your mortgage rarely pays off in 2026 when your current mortgage rate sits below today’s average. Start with your statements: write down both rates, the months left on the car loan and your mortgage balance. Then price a home equity loan or HELOC against an auto refinance, and check current mortgage rates before you request a cash-out quote.