Purchasing A Home With Someone You’re Not Married To…

I often have clients who purchase homes with people they aren’t married to. This doesn’t have to necessarily be a romantic relationship. I’ve had siblings purchase a home together because it’s cheaper and better than renting. I’ve also had situations where good friends choose to be co-owners of a home instead of just being roommates in a rental.

Whatever the situation, there are pros and cons.

The positives are that all borrowers’ income and employment are used to qualify for the home purchase. This means that there is collective borrowing power. Each of you will have to complete your own application, but your incomes (and credit scores) will be used jointly to qualify you for financing. You can pool your money for a down payment, too.

All of that sounds great, right? So what are the negatives?

Well, the biggest is that you’re “jointly” liable for payment of the loan. So however you have your split of the portions of the mortgage payments set up, if one person can’t hold up their end of the bargain, the other has to make up the difference, or risk ruining their credit, or worse.

It’s a good idea, regardless of your relationship, when you go into the purchase of a home together, that you have a written agreement ahead of time. I have drafted countless co-ownership agreements for clients who are purchasing homes together that are not married. It’s a good idea. Some people opt to hold the property in an LLC, with a set percentage of ownership for each individual. In this agreement, you should not only have how much each person is responsible for in the way of the mortgage payment, but upkeep and repairs also. What happens when there is a major repair, like the roof?

You can purchase property with someone you’re not married to. It is just smart to do some planning (and some communication!) first.