Can You Buy a House Together If You’re Not Married?

Unmarried individuals can purchase a house together, though it involves unique legal and financial considerations compared to married couples. Careful planning and clear communication are essential to protect both parties’ interests.

Understanding Co-Ownership Structures

When unmarried individuals buy property together, they typically choose between two main legal co-ownership structures: Tenancy in Common or Joint Tenancy with Right of Survivorship. Selecting the appropriate one is a foundational decision that impacts future rights and responsibilities.

Tenancy in Common allows two or more people to hold distinct, undivided shares of a property. These shares do not have to be equal. Each co-owner can sell, mortgage, or transfer their share independently without the consent of the other co-tenants. There is no right of survivorship; if one co-owner dies, their share does not automatically pass to the surviving co-owner but instead goes to their estate or designated heirs.

Joint Tenancy with Right of Survivorship (JTWROS) is a co-ownership structure where each owner holds an equal share of the property. A defining characteristic of JTWROS is the right of survivorship: if one joint tenant dies, their ownership interest automatically transfers to the surviving joint tenant(s). To create a joint tenancy, four “unities” must be present: unity of time (all owners acquire interest at the same time), unity of title (all acquire interest by the same document), unity of interest (all have equal shares), and unity of possession (all have equal right to possess the entire property).

Navigating Mortgage and Financial Aspects

Lenders assess unmarried couples’ mortgage applications as co-borrowers, evaluating both partners’ incomes and credit scores. If one partner has a significantly lower credit score, it could negatively affect approval chances or result in less favorable interest rates and loan terms.

Down payments and closing costs represent significant upfront expenses. Couples can combine their funds for these contributions, or one partner might contribute more than the other. It is advisable to document any unequal contributions clearly, as this information will be important for future financial discussions or agreements regarding equity.

Ongoing financial responsibilities include monthly mortgage payments, property taxes, homeowner’s insurance premiums, utilities, and maintenance costs. Couples often agree to divide these expenses equally, proportionally to their incomes, or based on their initial contributions to the home.

Setting up a joint bank account can simplify financial management. Both partners can contribute a predetermined amount each month to cover the mortgage, taxes, insurance, and routine maintenance costs. This approach ensures shared expenses are paid on time and provides a clear record of contributions, reducing potential disputes. Funds for unexpected repairs or emergencies should also be considered and potentially held in this joint account as an emergency fund.

Unmarried couples file taxes separately, meaning they cannot combine their incomes or deductions as married couples filing jointly can. Each partner can claim deductions for the amount of mortgage interest and property taxes they individually pay, even if only one name appears on the Form 1098, Mortgage Interest Statement, or the property tax bill. Upon sale of a primary residence, each unmarried co-owner may be eligible for a capital gains tax exclusion of up to $250,000 on the profit, provided they meet the ownership and use tests by living in the home for at least two of the five years before the sale.

Essential Legal Agreements for Protection

A formal written agreement, often referred to as a cohabitation agreement or property agreement, is highly recommended for unmarried couples buying a home. This document provides clarity and protection for both parties, establishing a framework for their shared ownership.

The agreement should clearly state the ownership percentages of the property, especially if they are unequal. It also needs to document initial financial contributions, such as the down payment and closing costs. The agreement should outline ongoing financial responsibilities for mortgage payments, property taxes, homeowner’s insurance, utilities, and maintenance costs.

The agreement should detail how major decisions regarding the property will be made, including significant renovations, refinancing the mortgage, or eventually selling. Establishing a clear process for these discussions helps prevent future disagreements and ensures both parties have a voice in important matters.

Including buyout clauses within the agreement is also important. These clauses specify what happens if one partner wishes to sell their share or if the relationship ends. The agreement can outline the process for valuing the property, how a buyout price would be determined, and the timeline for such a transaction.

A dispute resolution mechanism, such as mediation or arbitration, should also be part of the agreement. Finally, the agreement should specify the conditions and procedures for selling the property, including how sale proceeds would be divided after accounting for outstanding mortgage balances, selling costs, and any documented unequal contributions.

Planning for Future Scenarios

Considering future scenarios, such as the dissolution of the relationship or the death of a partner, is an important part of buying a home as an unmarried couple. Having a plan in place can simplify complex situations.

If the relationship ends, the co-ownership agreement dictates the practical implications for the home. It outlines whether one partner will buy out the other’s share or if the property will be sold. Without such an agreement, partners may face prolonged negotiations or legal battles to divide the asset.

Should the property be sold, the agreement also specifies how the proceeds will be divided. After paying off the outstanding mortgage and covering selling costs, the remaining funds are distributed according to the ownership percentages or documented contributions.

Estate planning is particularly important for unmarried partners, as state intestacy laws generally do not recognize unmarried partners as legal heirs. If one partner dies without a will, their share of the property, if held as Tenancy in Common, would pass to their blood relatives according to state law, not automatically to the surviving partner.

Conversely, if the property is held as Joint Tenancy with Right of Survivorship, the deceased partner’s share automatically transfers to the surviving partner. However, even with JTWROS, a will remains important for other assets and to ensure overall estate wishes are respected. Without a comprehensive estate plan, unmarried partners lack the legal protections automatically afforded to married couples.