Resource Center Co-borrower

Unmarried Home Buyer: Can I Purchase a Home with my Friend, Family Member, or Unmarried Partner?

Unmarried homeowners

Best friends, unmarried couples, co-habitating family members – lend Morty your ears!

You may be living with a partner, friend, or family member and wondering why you are paying rent month after month, year after year, with no end in sight.

If you are currently looking at the person on the couch next to you and thinking, “hey, renting is soooo last decade. Let’s buy an asset together!” then this post if for you.

At MortgageHippo, we welcome aspiring homeowners of all shapes, sizes, and relationships. But before you high five from across the couch, know that buying an asset of any value is more complex when purchasing with another person. Purchasing a home is no exception and future unmarried homeowners should take notice.

First-time home buyers should not be dissuaded from purchasing a home solely due to their marital status. Before buying a home with another person, think about the future and how your relationship with that person or your expectations may change.

Is the person living with you – whether your best friend Betty or your boyfriend Bobby – going to be the person you would like to live with over the next year, 5 years, or even 30 years ? Do you really want to bring a property into the complex world of your relationship?

You will feel much more comfortable buying an asset together if you consider the following factors:

First, and most importantly, talk to one another. Swap financial information, expectations, and future plans while also discussing the “what ifs”.

What if one person wants to move out, what if one person cannot afford to pay a portion of the bills, what happens if one person wants to sell their interest, what if… you get the point.

Secondly, determine how much you both can afford together.  We recently wrote a blog entry on the topic of home affordability and how to determine it.

Next, if after all of this you still want to purchase a home together, consider your homeownership title options: joint tenant ownership or tenants in common.

  • Under joint tenant ownership, each person owns the property equally and his or her share – this is about to get grim – is transferred to the surviving person upon the death of the first person.

  • Under tenants in common, each person owns a percentage of the property (not necessarily equally) and if there is a death of one of the owners, their ownership percentage will go to their beneficiary (as stated in their will) or next of kin. So, under tenants in common, you can each decide to own a percentage of the home based upon your percentage of contribution to the down payment or expenses, or any other way you see fit.

With all of this in mind, put your expectations and “what ifs” down on paper and draft a formal agreement.

Make sure it explains who is contributing financially, the expenses for which each partner is responsible, how much equity each partner will receive in the event of a sale, and sorry to get a bit grim again, what would happen to the ownership of the home in the event of one person’s death.

You will both feel much better if your agreement of “what ifs” is down in writing.

Now you have done the hard part, you do NOT need to consider the pains and headaches of the mortgage process, because MortgageHippo was designed to make the mortgage process simple, transparent, and efficient.

Visit our blog about mortgage co-borrowers to consider whether you both should be on the mortgage together (there are pros and cons). Our mortgage calculator will take care of everything from there!

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