6 things to avoid when buying a house with someone you're not married to

More than half of unmarried couples — 58% to be precise — would consider buying a house prior to getting married, according to a recent study conducted by Orchard. But buying a house with a friend or someone you are not married to comes with risks, especially if you don’t make contingency plans. We outlined the six biggest mistakes to avoid when buying a house with an unmarried partner and what to do instead.

1. Don’t keep secrets

Secrecy is never a good thing in a relationship — especially if you plan on owning property with your partner. Sit down before you start your home search and put everything on the table. If you plan on taking out a mortgage together (a joint mortgage), your lender will go through your financial details with a fine-toothed comb, so you may want to discuss them with your partner first to avoid any surprises. Here are some topics to get you started:

• Your income: How much do you make? How stable is your source(s) of income? 
• Your assets: Do you own other properties or businesses? What about stock? 
• Any debt: Do you have student loan or credit card debt? What is your debt-to-income ratio?
• Your spending habits: Where does your money go each month and how much can you reliably commit to your mortgage and the other costs of home ownership?

It is especially important to know (or disclose) if you or your partner has debt that will make it hard to secure a good mortgage or to make payments on time month after month. If there comes a day where you can’t make your mortgage payments, both you and your partner will run into some major financial trouble.

Keep in mind, having this conversation (and even taking out a mortgage together) doesn’t mean you have to share all of your money. You can still keep your finances separate, but you should both be aware of the bigger picture. Create a budget together to confirm that you can cover the expenses you’ll take on when you buy a home.

2. Don’t forget to create a cohabitation property agreement

When you buy a home with someone you aren’t married to — including a romantic partner — you need to have a cohabitation property agreement. This agreement clearly outlines how you will manage joint ownership and it gives you both protection (similar to the legal protections that come with marriage) in the event that you need to divide the property after a breakup. 

Your cohabitation property agreement should outline the following details:

• Type of ownership on the property deed 
• What percentage of ownership you each have
• Mortgage payment responsibility 
• Buyout agreement
• What happens if one partner takes a job somewhere different
• Dispute process
• Exit strategy in case of a breakup
• How you will pay for utilities and other household expenses

It’s best to create this agreement with an attorney, while working with your own separate attorneys to ensure your best interests are looked after. As a bonus, working through this process will force you to get on the same page about many aspects of homeownership and will give you a better idea if you want to make this huge financial commitment together. The last thing you want is to lie awake at night thinking I regret buying a house with my partner.

3. Don’t neglect the title and deed

The title of your home represents legal ownership of the property. It’s an important — albeit abstract — concept that gives a person, persons, corporations, or trusts all of the rights, responsibilities, and uses of a residential property. The deed is the legal documentation of that ownership.

When you buy a house with a married partner, both partners typically appear on the deed. But when you buy a house with someone you aren’t married to, there’s a few different ways ownership can shake out. The deed for your home needs to reflect how you choose to share (or not share) the property.

• Option 1: One partner owns the whole property. Only their name appears on the deed.
• Option 2: Both partners own the property as joint tenants with rights of survivorship. If one partner dies, the surviving partner owns both shares.
• Option 3: Both partners own the property as tenants in common. In this arrangement, shares of ownership are unequal and one or both partners may choose to pass their share onto someone other than their surviving partner (such as a child). 

A real estate attorney can help you decide which option is best for you, as well as help you navigate how to handle adding one or both names to the deed before you buy a home.

4. Don’t discount credit issues

If one or both of you has a bad credit score you will have some issues to work out surrounding mortgage approval.

Even if one partner has a good credit score, it will be harder to qualify for a joint mortgage if the other partner has bad credit — and if you do qualify, the interest rates will be higher. Use our mortgage calculator to understand how much more you could end up paying with different interest rates and see how much you can afford.

You may decide that it’s best if only the partner with good credit takes out the mortgage. In this case, only the partner whose name is on the mortgage will have the responsibility to repay it — even if both names are on the deed. This means that one partner will be entitled to partial ownership of the home but won’t be legally required to make payments for it.

5. Don’t go in without a backup plan

Homeownership can lead to complicated dynamics — regardless of whether you’re married to your co-owner(s). Even if it seems like the partnership will last, it’s important to have a contingency plan for your home in the event that you break up. One of you may want to move for a job or you may decide to go your separate ways, and you’ll need to decide what to do with your home.

You also need to plan for other unexpected life events, like disability, that may make it so one of you can’t work and contribute to the mortgage. It’s also important to have a plan in place in the event that one of you passes away — depending on your ownership agreement, what happens when one mortgage holder dies can get complicated.

For example, if you own the property as tenants in common, who gets your share when you die needs to be specified in your will. If there is no will in place your share will pass onto your heir (or heirs) as dictated by your state’s intestacy law, which can lead to your partner owning a home with someone they never intended to. It may feel morbid to plan for the worst but it’s important that you do for the sake of the surviving partner.

6. Don’t forget to update agreements

Revisit your paperwork and agreements if there is any change in your relationship to your partner. For example, if you separate, you’ll need to figure out how to handle the property. Or, if you get married, you’ll want to update your agreements to reflect the change. You should also consult a tax professional in the event that you get married to ensure you’re getting the most out of the mortgage interest deduction, which is harder to take advantage of when you aren’t married.

FAQs for unmarried couples buying a house

Unmarried couples buying a house together have to take some extra considerations. Here are some of the most commonly asked questions for those buying a house with an unmarried partner.

Can you buy a house with someone without being married?

Yes, you can buy a house without being married, but you’ll want to ensure that you don’t make any of the mistakes outlined above. Most importantly, make a cohabitation agreement that will outline how you will manage property, finances, and possibility of a break up.

Should I buy a house with my boyfriend, girlfriend, or partner?

Only you and your partner know if buying a house together is the right choice for you. If you’re considering buying a house with someone you’re not married to, start by having a conversation about what that arrangement might look like for you and your financial goals.

What if I regret buying a house with my boyfriend, girlfriend, or partner?

If you regret buying a house with your partner, you may choose to sell the house or buy them out of their shares. Look to your cohabitation property agreement for how to navigate the situation. If you didn’t make one, consult an attorney to help you understand your options.