While married couples make up the majority of people who buy homes, you don’t actually have to be married to become a homeowner. I’m planning to become one myself next year, and I’m purchasing a home solo.
But you can also take out a mortgage loan with someone else without being married to them. After all, relationships are like personal finance — personal. So here’s what you should think about if you’re hoping to buy a home with a partner you’re not married to.
What type of mortgage will you get?
There are many different types of mortgages out there, and more mortgage lenders than you can shake a stick at. So you have a veritable ton of options for home loans, including the more common types (like conventional loans and FHA loans) as well as more specialized loans.
For example, if one of you is a qualifying veteran (or surviving and non-remarried spouse of a deceased veteran), you might be able to take out a VA home loan, which comes with the excellent benefit of not requiring a down payment (although, as Rocket Mortgage notes, if one of you isn’t a veteran, you may be required to pay a down payment on part of the loan).
While you might have a wider choice of loan types, you’ll also need to focus on your financial profiles, as they will have a major impact on whether you can get a mortgage (as well as how much you’ll pay for the privilege, in the form of interest). I hate to say it, but if you’re getting a joint mortgage (regardless of your marital status), the lender will consider the lower middle credit of the two of you.
Everyone has more than one credit score, because there are three major credit bureaus. If you have credit scores of 805, 800, and 790, while your partner is sitting at 710, 700, and 690, your lender is likely to go with that 700. This is still a decent credit score to get a mortgage, but it’s in everyone’s best interest for you both to boost your credit scores ahead of applying to get the lowest interest rate possible.
What type of co-owners will you be?
Being married to someone is no guarantee of spending the rest of your life together, nor is it a guarantee they won’t severely harm your finances (financial abuse is a real thing, and divorce can also hit your finances HARD). That said, if you’re buying a piece of property with someone you’re not married to, there will be more hoops to jump through to ensure all parties are protected in the deal.
Decide whether you want to be tenants in common or a joint tenancy when you get the house. According to FindLaw, these are the two best ways to approach buying a home with someone you’re not married to. If you’re tenants in common, you can have unequal shares in the property — maybe one owns 40%, while the other owns 60%. To break the arrangement, one of you can buy out the other, you can sell the house and split proceeds accordingly, or if one of you dies, the deceased’s heir can sell their stake in the home.
With joint tenancy, the two co-owners get equal parts of the property at the same time and both of you will be on the deed. This arrangement can be broken if a co-owner decides to sell or transfer their share of the home to another person. If that happens, the agreement just becomes a tenancy in common. In a joint tenancy agreement, you get right of survivorship, meaning that if one of the partners dies, the other receives their share of the property.
How will you handle finances and home upkeep?
You must get on the same page about the money side of owning a home (which isn’t cheap, by the way). You might consider getting a lawyer involved to work up a formal agreement about who will pay for what when it comes to the mortgage loan, maintenance, property taxes, and all the other costs of homeownership.
If you don’t already live together, it might be unclear who should handle what, and a neutral third-party like a lawyer can be a big help in making these decisions and creating a document that outlines everyone’s responsibilities and rights when it comes to the property and related financial matters.
You don’t have to be married to buy a home with someone, but it’s still a good idea to start the process with clear and defined expectations. As in many aspects of life and especially relationships of all kinds, communication is key. Take the time to discuss these points carefully before you start house hunting.