Can My Girlfriend and I Buy a House Together?

Buying a home together is a significant step for unmarried couples, offering both opportunities and unique considerations. More unmarried partners are choosing to invest in real estate jointly, reflecting a shift where pooling resources makes homeownership more attainable. This journey requires diligent planning and clear communication to ensure a smooth process and protect both individuals’ interests.

Financial Readiness

A thorough assessment of combined financial health is essential for unmarried couples buying a home. Partners should discuss incomes, debts, and savings to create a realistic budget for all homeownership expenses, including mortgage, property taxes, insurance, and maintenance. This discussion helps determine financial feasibility and shared responsibilities.

Credit scores influence mortgage eligibility and interest rates. Both individuals should understand their credit profiles, as lenders often consider the lower score for joint applications. If one partner has a lower score, improving it by reducing debt or correcting report inaccuracies can enhance borrowing power. Strong credit for both partners can lead to better loan terms.

Saving for a down payment and understanding closing costs is important. The down payment, a percentage of the home’s price, influences the loan amount and private mortgage insurance. Closing costs, fees associated with the transaction, typically range from 2% to 5% of the loan amount. Couples should track individual contributions to these upfront expenses for financial clarity.

The debt-to-income (DTI) ratio assesses a borrower’s ability to manage payments. This ratio compares total monthly debt payments to gross monthly income. A lower DTI, generally below 43% for conventional loans, indicates a healthier financial standing and improves mortgage approval chances. Reducing existing debt before applying can improve this ratio.

Beyond the down payment, an emergency fund provides a financial cushion for homeowners. This fund, separate from home purchase savings, covers unexpected repairs, appliance replacements, or job loss. Financial advisors often recommend having three to six months of living expenses, including estimated homeownership costs, in an accessible savings account.

Legal Agreements and Protections

Unmarried couples buying property should establish legal agreements to protect individual interests and define shared responsibilities. A cohabitation agreement, or property agreement, is a legally binding contract outlining asset and liability management during co-ownership and what happens if the relationship ends. These agreements can detail initial financial contributions, division of ongoing expenses like mortgage payments, utilities, and maintenance, and how future equity will be shared.

Documenting individual contributions to the down payment, mortgage payments, renovations, and maintenance is important. Without clear records, disentangling financial interests can be complex during a dispute or separation. The cohabitation agreement can specify how contributions are recognized and their impact on each partner’s ownership share or financial return, preventing future disagreements.

A comprehensive cohabitation agreement should include various exit strategies. These scenarios include one partner selling their share, the death of a partner, or relationship dissolution. The agreement can stipulate terms for one partner buying out the other, the property sale process, or how proceeds are divided. Establishing these terms early can prevent contentious legal battles.

Estate planning is important for unmarried co-owners, as property does not automatically transfer to the surviving partner as it might for married couples. Up-to-date wills ensure each partner’s property share is distributed according to their wishes upon death. Without a will, state intestacy laws dictate inheritance, which may not align with the surviving partner’s expectations.

Navigating the Mortgage Process

Securing a home loan involves pre-qualification and pre-approval. Pre-qualification estimates borrowing capacity based on self-reported information, offering a preliminary affordability idea. Pre-approval involves a rigorous lender review, including credit checks and income/asset verification, resulting in a conditional loan commitment. Pre-approval signals to sellers that you are a serious, qualified buyer.

Unmarried couples can apply for a mortgage jointly or individually. A joint application combines incomes and credit histories, potentially increasing borrowing capacity and securing a lower interest rate if both partners have strong financial profiles. If one partner has a significantly lower credit score or higher debt, it could negatively impact loan terms. In such cases, the stronger partner might apply individually, though this limits the loan amount to their income and credit.

Lenders require documentation for mortgage applications, including recent pay stubs, W-2 forms, federal tax returns for the past two years, and bank statements to verify assets for down payment and closing costs. Prompt and accurate submission expedites the process. Additional financial records, like investment statements or other income proof, may also be requested.

After submission, the loan enters underwriting. Underwriting is the lender’s assessment of lending risk, evaluating creditworthiness, income stability, and property value. The underwriter reviews financial information to ensure it meets criteria and regulatory requirements. This may involve further requests for documentation or clarification before final loan approval.

Various loan types are available, each with specific eligibility and benefits. Common options include conventional loans and government-backed loans like Federal Housing Administration (FHA) loans for lower down payments or credit scores, or Department of Veterans Affairs (VA) loans for eligible service members and veterans, which may offer no down payment. A mortgage professional can help identify the most suitable financing.

Understanding Property Ownership

The legal manner in which unmarried couples hold property title is a significant decision with lasting financial and legal implications. One common option is Tenancy in Common (TIC), where each owner holds a distinct, divisible share. Shares can be unequal, reflecting different contributions, and each co-owner can sell, mortgage, or bequeath their share independently. If one co-owner dies, their share passes to their designated heirs via will or state intestacy laws, not automatically to the survivor.

Joint Tenancy with Right of Survivorship (JTWROS) is another common ownership form. Co-owners typically hold equal shares, and a defining characteristic is the “right of survivorship.” Upon the death of one joint tenant, their property interest automatically passes to the surviving joint tenant(s) without probate. This automatic transfer bypasses the deceased’s will and estate, streamlining ownership transfer.

In some jurisdictions, community property is a legal framework for married couples, where assets acquired during marriage are jointly owned. While this applies to marital estates, it is not an option for unmarried couples. Understanding its distinction from common co-ownership forms helps in comprehending property law.

The chosen ownership structure should align with the couple’s financial contributions, long-term goals, and estate planning. If partners contribute unequal amounts or wish to pass their share to someone other than their co-owner, Tenancy in Common may be appropriate. If the intent is for the property to automatically transfer to the surviving partner, Joint Tenancy with Right of Survivorship could be preferred. Consulting legal and financial advisors ensures the structure reflects the couple’s wishes and provides desired protections.