Can an Unmarried Couple Buy a House Together?

The number of unmarried couples who cohabitate is growing in the United States. In a recent study, the percentage of young adults ages 18-24 living with a partner was larger than that of young adults living with a spouse.

Just because a couple isn’t married doesn’t mean they can’t enjoy homeownership together. Buying a house can be a symbolic testament of love and commitment to each other, along with a practical financial investment. 

Can an unmarried couple buy a house together? Yes, but they have a few unique considerations to keep in mind before they start meeting with real estate agents and touring homes. Here’s what you need to know before buying a home with your partner.

Can an Unmarried Couple Buy a House Together?

Unmarried couples can work with lenders to secure mortgages and buy properties. They will either apply for a joint mortgage together or a single person can apply for the loan and then work on a payment agreement with their partner. 

Buying a house with a partner can be better because it increases your monthly incoming, potentially lowering your debt-to-income ratio (DTI). For example, if you earn $60,000 per year, then your maximum mortgage payment would be around $1,800 (36% of your monthly income) if you don’t have any other debt. However, if your partner also earns $60,000 per year, then your maximum loan payment jumps to $3,600 – also if they don’t have other debt.

That said, everyone’s financial situation is unique. Both partners need to be transparent about their income levels, credit scores, and debt. This information will come up during the loan application anyway, so it helps to be aware of your financial situation as a partnership ahead of time. One partner’s credit score or debt might not make them an ideal candidate to add to a mortgage application, especially if the other partner can get approved for the loan on their own. 

Married couples also need to have these discussions. Both partners need to be aware of what financial assets each person brings to the table and the potential debts that come with them. No one wants to be surprised during the mortgage application process.  

Legal Considerations for Buying a House as an Unmarried Couple

Unmarried couples can take steps to make the purchase process smoother and to protect themselves in the years to come. Here are a few steps you should take if you are preparing to buy a house with your partner for the first time.

Discuss Ownership Structure 

The ownership structure identifies who owns the property and what percentage they own. Two of the most common ownership structures are joint tenancy and tenancy in common. 

With joint tenancy, each partner is an equal owner of the property. This is the most common option for unmarried couples who are committed partners. The main benefit of this option is the right of survivorship, which is the automatic transfer of ownership if one partner dies. To move forward with joint tenancy, all parties must purchase the property at the same time and they must have equal rights of ownership. 

A tenancy in common agreement allows for unequal ownership. One partner can own 75% of the house while the other owns 25%. There is no right of survivorship and each partner can sell their portion of the property when they choose. 

A tenancy in common agreement is often used by two or more people buying a vacation home or investment property together. When an owner passes, the asset gets passed to their heirs. This could also be a good option if one partner brings more to the purchase financially than the other. If one person provides a large down payment and contributes significantly more to the mortgage, they might want to protect their assets with this agreement. 

Discuss your ownership options before you start the purchase process so you know how you want to move forward.

Create a Cohabitation Agreement

Outside of the mortgage application and purchase process, you may want to develop an agreement with your partner that outlines how this asset will be managed. This can be an informal agreement that helps you discuss tricky financial issues or a formal contract that is notarized and reviewed by an objective third party. This cohabitation property agreement is meant to protect one partner if the other doesn’t keep up with their financial obligations. Here are a few things to discuss. 

• How ownership is divided: is the property owned 50-50 or does one person own a larger percentage? 
• How costs will be divided: discuss mortgage payments, insurance, property taxes, utilities, and repair expenses. If the HVAC system needs to be replaced, who covers the costs? How are they split? 
• What happens if the relationship ends: no one wants to talk about breaking up, but it is always a possibility. Discuss who will continue living in the house and if it needs to be sold. Consider what payout would be fair if one partner wants to continue living in the home. 

Just like married couples, you may factor in children when developing this agreement. A stay-at-home partner might not bring in a salary, but they care for the kids and ensure the household runs smoothly. This can affect how the property is divided if you part ways.

Start Your Estate Planning

In the same way that no one enjoys talking about potential breakups, no one wants to think about dying. Less than half of Americans have written wills outlining how their assets should be divided after they die. 

You are never too young to start estate planning, especially if you are growing your financial assets by buying property. Develop a will that outlines who receives your assets, even if you are joint tenants with your partner. Legal documents that clarify your wishes can streamline the asset distribution process so your loved ones can focus on mourning you. 

Both the cohabitation agreement and will are documents that you never want to use but will be glad to have. It is easier to turn to existing papers than to try to navigate complex financial issues during emotionally distraught times.

The Home Buying Process For Unmarried Couples

Buying a house as unmarried partners isn’t that different from married couples. You still need to consider your down payment, housing expenses, and repair budget. Here are a few steps you can expect to take on your journey to home ownership.

Hire a Real Estate Agent

Married couples and unmarried couples alike need to hire a trusted agent to tour homes, make offers, and get to the closing table. Interview at least three agents and discuss the finances behind the purchase process. 

During your first agent meeting, explain whether the home purchase will be done equally or if only one person will be completing the mortgage application. Also, identify the decision-makers and points of contact for the purchase process. Who can approve actions and who should be the first person your agent reaches out to? These discussions can prevent confusion or delays in the buying process.

Get Pre-Approved for a Mortgage

The next step is to meet with potential lenders to start the mortgage pre-approval process. Unlike pre-qualification, you will need to submit documents for your lender to review before they can approve you. During this time, you will submit documents together with your partner if you are both on the loan. 

It’s possible for one person to be on the loan and two people to be on the deed. If one person has a stronger financial portfolio that makes them more desirable to lenders, it might be easier to apply for the loan as a single person. However, make sure you have agreements in place to ensure your partner pays their share of the loan.

Decide on Your Down Payment

Discuss how much each person will contribute to the down payment and what percent of their funds will remain in savings. While many people try to maximize their down payments to minimize their loan payments, it’s important to set aside emergency funds for unexpected repairs. 

Document the contributions of each person so it is clear how much each partner put into the home. In the event of a breakup, both parties can ensure an equitable split.

Potential Risks and How to Address Them

Buying a house is a wonderful way to signify your love and commitment to your partner. However, it is also a significant financial asset that might need to be divided someday. Here are a few concerns that all types of couples, regardless of marital status. Make sure you discuss these issues before you start the purchase process. 

Relationship Changes

Both married and unmarried couples can end their relationships, but unmarried couples rarely have the same protections as their married counterparts. For example, if one person is the sole owner of the house and there isn’t a cohabitation agreement documenting the contributions of the other partner, the non-owner could be kicked out without any financial assets or recourse. 

You may want to work with a law firm to establish ownership of community property. This can protect both partners in the event of a breakup. Having documents in place for how the property should be distributed can also make the breakup process faster, allowing both parties to move on.

Unequal Financial Contributions

It’s rare for two people to have the same income levels, expenses, debt, and ability to contribute to household expenses. However, tensions can rise when one person brings more money into the relationship. Before the home purchase, discuss how you will split the mortgage payment and who will cover maintenance costs. Some people split all expenses 50-50 while others opt for equitable distribution depending on income levels. One partner might cover 70% of the mortgage if they earn significantly more than their loved one.   

Unlike married couples, unmarried partners often keep their finances separate. This allows for each person to maintain their own independence as long as they keep up with their expected contributions. However, it can also create arguments if one person has a harder time affording half of the homeownership costs or can’t keep up with the spending habits of their partner. 

Disagreements About the Property

Along with discussing the financial aspects of homeownership, talk about the decision-making process that comes with the legal ownership of a home. For example, if one person contributes a large down payment and pays a larger percentage of the mortgage, they might feel entitled to make design choices and override their partner when it comes to home improvements. This can be frustrating to the other person who feels like their opinion is less valid. 

Discuss how you will manage the home and make decisions about repairs, improvements, and design investments. This is another conversation that is easier to have before you move in instead of waiting for conflicts to arise.

Communication and Transparency Can Make Homeownership Easier

Married and unmarried couples alike may notice an uptick in arguments in the first few months of homeownership. Buying and moving into a house is stressful and comes with a learning curve if this is your first time doing it. Unplanned expenses, sudden repairs, and even basic improvement projects can create tension when it comes to splitting costs. 

Eliminating disagreements is impossible, but you can mitigate them with clear communication, financial transparency, and a willingness to work together. If you both are honest and clear in your emotions, you can overcome your problems and create a healthy household.  

Meet with a legal professional and financial advisor before you buy. These experts can help you gather the right documents to successfully buy property together. They can help you understand your rights and options for protecting yourselves financially in the event of a breakup. 

Once you are ready to buy, turn to FastExpert. You can find real estate agents in your area who specialize in your ideal neighborhood or home type. Whether you want a house with a home office or a dock, they can make the purchase process easier. Try FastExpert today and take steps to become a homeowner.