Can an Unmarried Couple Buy a House Together?

Unmarried couples can purchase a home together. This process involves distinct considerations, requiring planning and understanding of legal and financial implications.

Understanding Ownership Structures

When an unmarried couple buys a home, they must determine how to legally hold the property’s title. This choice dictates each owner’s rights and responsibilities. The two most common methods are Tenants in Common (TIC) and Joint Tenancy with Right of Survivorship (JTWROS).

Tenants in Common allows each partner to own a distinct, undivided interest in the property, which can be equal or unequal. For instance, one partner might own 60% while the other owns 40%, reflecting differing contributions. Each co-owner can independently sell, mortgage, or transfer their share to an heir through a will, as there is no automatic right of survivorship. Upon the death of a tenant in common, their share passes to their designated beneficiaries, not automatically to the surviving co-owner.

Joint Tenancy with Right of Survivorship means both partners own an equal and undivided interest in the entire property. A key feature is the right of survivorship: if one co-owner dies, their share automatically passes to the survivor, bypassing probate. This provides a clear path for ownership transition but also means neither partner can independently sell or will their share to someone else. Consulting with a real estate attorney is advisable to determine which titling option best aligns with the couple’s financial contributions and long-term intentions.

Navigating Financial Aspects

Purchasing a home as an unmarried couple involves financial planning for the down payment, mortgage, and ongoing expenses. Down payment contributions can be equal or unequal, reflecting each partner’s financial capacity. Documenting these initial contributions is important for future clarity, especially if the property is sold or the relationship changes.

When applying for a mortgage, lenders assess both partners’ credit scores, incomes, and debt-to-income ratios. The lower credit score between the two applicants can influence loan terms and interest rates, potentially leading to less favorable borrowing conditions. Lenders provide a single Form 1098 detailing mortgage interest paid, which can impact how each partner claims deductions if they itemize their taxes.

Beyond the mortgage, couples must establish a clear plan for managing recurring home-related expenses. These include monthly mortgage payments, property taxes, homeowner’s insurance, utilities, and costs for maintenance and repairs. Creating a detailed financial plan that outlines how these expenses will be split, whether equally or based on income, can prevent future disagreements. Some couples find it beneficial to establish a joint bank account specifically for shared housing costs and maintain an emergency fund for unexpected property expenditures.

Crafting a Property Agreement

For unmarried couples, a written property agreement, often called a cohabitation agreement, outlines financial and ownership responsibilities for their shared home. This agreement clarifies each partner’s rights and obligations. Without such a document, potential disputes can lead to time-consuming and expensive legal battles, particularly if the relationship ends.

A comprehensive property agreement should detail initial financial contributions made by each partner, including the down payment, closing costs, and any funds used for renovations. It should also specify how ongoing expenses, such as mortgage payments, property taxes, insurance premiums, and maintenance costs, will be allocated between the partners. This ensures transparency and accountability for all shared financial commitments related to the home.

The agreement also addresses how to handle future scenarios, including disagreements over property management, one partner’s desire to sell their share, or the dissolution of the joint ownership if the relationship concludes. Procedures for valuing the property, options for one partner to buy out the other, or mechanisms for selling the property and dividing the proceeds are included. This legally binding document offers peace of mind by clearly defining ownership rights and establishing a predetermined course of action for various contingencies.

Considering Estate Planning

Estate planning is important for unmarried couples who co-own property, as intestacy laws do not recognize unmarried partners. Without a will or other estate planning documents, state laws dictate how a deceased person’s assets are distributed, prioritizing spouses, children, parents, and other blood relatives. This means a surviving unmarried partner may not automatically inherit the deceased partner’s share of the property, even after many years of cohabitation.

The importance of a will becomes evident when property is held as Tenants in Common, where each partner’s share can be willed to a chosen beneficiary. Without a will, that share would pass according to intestacy laws, potentially going to family members rather than the surviving partner. Even with Joint Tenancy with Right of Survivorship, where the property automatically transfers to the survivor, estate planning documents remain valuable for addressing what happens to the property upon the death of the second partner, especially if both individuals have separate heirs.

Creating a will ensures that each partner’s wishes regarding their share of the property are formally documented and legally enforceable. Beyond wills, other estate planning tools such as revocable living trusts can also be utilized to manage and distribute property, providing greater control and flexibility. These documents allow unmarried couples to ensure their co-owned home is distributed according to their intentions, providing security and clarity for the surviving partner and any other beneficiaries.