Buying a home with a friend, partner, or sibling, can help you afford a home. But a little planning upfront can save a lot of trouble later.
Recently, I worked with two friends who had been roommates since college. Over the course of ten years, they moved between apartments, watched each other’s dogs during vacations, and even cosigned on a lease together. They were more than just roommates; they were a support system.
After one rent hike too many, it occurred to the roommates that they could be putting their rent money toward something they actually own. Neither of them came from a family that talked much about homeownership, and both were navigating careers with moderate salaries. But after a weekend of spreadsheets and Googling “how to buy a house with a friend,” they reached out to me to help them buy a home.
Six months later, they closed on a perfect starter home. It was a two-bedroom house in a transitioning neighborhood. It wasn’t perfect, but it was theirs, and it cost less per month than their last apartment.
Stories like the one with these two roommates are becoming increasingly more common. With rising home prices, more first-time buyers are finding that co-buying isn’t just a backup plan. It’s a strategic move.
If you're considering teaming up with a friend, sibling, or unmarried partner, here's what you should know before you take the leap.
Why First-Time Buyers Are Choosing to Team Up
Home prices are high in most markets, rent keeps going up, and interest rates continue to hover around 7%. For many people, buying a home alone just isn’t doable right now. That’s why more buyers are choosing to team up.
When two people buy a home together, they can share the down payment, monthly mortgage, taxes, and repair costs.
Lenders often approve bigger loans with two incomes, which means buyers might qualify for a better home than they could on their own. It can also help people become homeowners sooner, instead of waiting years to save up alone.
How to Set Up Ownership
The way you share ownership matters. It affects what happens if one person wants to move, passes away, or pays more than the other.
Some buyers go with joint tenancy, which gives each person equal rights to the home. If one person dies, the other automatically gets their share.
Others choose tenants in common, where each person owns a set share (like 50/50 or 60/40). This lets them pass down their part in a will or sell their share later.
If the home is an investment, you could create an LLC (Limited Liability Company) or partnership. This is more common for buyers who treat the home like a business deal. A lawyer can help you set this up the right way. However, few lenders will approve a loan to an LLC according to real estate platform Stessa. You may need a business loan for that.
I previously worked with two clients who were cousins with real estate ambitions. They created an LLC before buying a three-unit property.
I wasn’t able to do their loan because it wasn’t a residential loan. I referred them to a lender that offered commercial loans.
Their attorney helped draft a formal agreement outlining everything from profit splits to dispute resolution. When one of the cousins received a job offer from across the country a year later, the buyout process was already well-defined and drama-free.
Why a Co-Ownership Agreement Matters
No matter what type of relationship you have with your friend, family member, or co-worker, co-buying without a written agreement is asking for trouble.
Your co-ownership agreement should cover the following:
Ownership shares and financial contributions
Buyout terms if one person wants to sell or move
Who makes decisions about repairs or renovations
How disputes are handled
What happens if someone stops paying or loses income
Think of it like insurance for your friendship and your finances.
What to Know About Buying a Home Together
When two people apply for a loan, most lenders look at both credit scores, but they base your rate on the lower one. So if one buyer has great credit and the other has a few late payments, your interest rate could go up.
Still, co-buying can work well if you’re open and honest. For example, if one person’s credit causes the loan to be more expensive, they might agree to pay more of the monthly cost.
When co-buying, in addition to looking at both credit scores, your lender will review both incomes. You’ll both be equally liable for the mortgage, even if only one of you misses a payment. That’s why it’s critical to:
Decide who goes on the loan and who goes on the title (these don’t always have to be the same)
Talk openly about your credit and debt
Keep track of who pays what
Talk through what happens if one person can’t pay
Consider opening a joint account used exclusively for mortgage payments and shared expenses. Every month, each of you deposit your half, and that account pays the mortgage, utilities, and maintenance costs.
It's a system that can help keep the financial lines from getting blurred.
Planning for Home Upkeep and Life Changes
Homes need maintenance. Things will break, and repairs cost money. Make a plan for how you’ll handle unexpected expenses.
You also need to prepare for bigger life changes. What if one of you gets married? Loses a job? Wants to move out early?
These aren’t just hypotheticals. They are real possibilities that need real solutions written into an agreement from the start.
Don’t Forget About Taxes and Insurance
Make sure both names are on the homeowners insurance policy. It should cover your property and protect you from legal issues if something happens.
When it comes to taxes, you’ll need to decide who gets to claim things like mortgage interest and property taxes. An accountant can help you split things fairly, especially if one of you paid more upfront or owns a bigger share.
If you form an LLC, you’ll have additional tax rules to follow. In those cases, working with a tax advisor from day one is crucial, and well worth the cost.
Communication Is Just as Important as the Contract
Legal docs are critical, but so is the day-to-day maintenance of your relationship.
Consider meeting every quarter or so to review finances, revisit home goals, and talk through any concerns. It’s like a board meeting for your house. All you need is coffee, laptops, and full honesty.
Checking in regularly can prevent small frustrations from becoming big problems. Update your agreement as needed. And if one person’s situation changes, revisit your expectations.
Friendship or family ties might get you to the closing table, but open communication will keep the partnership strong for the long haul.
Final Thoughts on Co-Buying
Buying a home with someone you trust can be a smart way to make homeownership possible, even in a tough market. It can help you afford more and build wealth sooner.
Just remember: it takes planning, honest conversations, and the right legal setup to protect your money and your relationship. Talk through the “what ifs” before you start house hunting, and work with a lender and advisor who can guide you through the process.
Before you start browsing listings, schedule conversations about money, boundaries, and long-term goals. Then, connect a mortgage lender, and if needed, a CPA who can help you create a framework that protects both your home and your relationship.
