Buying a house before getting married may not be the traditional route to homeownership, but it happens more than you might think. About one-third (31%) of all Americans have bought a primary residence with someone they aren't married to, according to a recent survey by Realtor.com. For 18- to 34-year-olds, that number jumps to 41%.
So if you’re thinking about buying property with a partner, know that you don’t have to be married to do so. However, it’s important to understand all the nuances before you jump into the process.
- When buying a home as an unmarried couple, it’s important to consider how you’ll define ownership.
- Mortgage lenders consider the lower of two applicants’ credit scores, so you may be better off having the mortgage in one person’s name.
- Having honest discussions about each other’s finances and how you plan to budget for home-related expenses is crucial before buying.
- A cohabitation agreement can protect both people financially and legally.
The Deed and Mortgage Are Separate
When you buy a home, you’ll need to decide whose name(s) will appear on two important contracts: the mortgage and the deed.
A mortgage is a financial contract between a borrower and a lender. It dictates who is responsible for repaying the mortgage loan according to specific terms. A deed is an official document that conveys ownership rights to a property.
Both unmarried partners may have their names on both the mortgage and the deed if they want to be seen as equal homeowners, said Claire Hunsaker, a financial advisor and founder of AskFlossie, a financial community for women, in an email to The Balance. However, depending on each person’s financial situation, that’s not always the best arrangement.
For example, there are a few ways ownership can be set up among unmarried partners:
Sole ownership is when an individual is the only owner of a property. The owner could be a single person, an unmarried partner in a relationship, or even a married person who wants to keep the title in their name alone.
Joint tenancy is when at least two people own a property together equally. If one of the owners dies, property ownership is passed to the other living partner through rights of survivorship.
Tenancy in Common
With tenancy in common, two or more people share ownership of a property with unequal percentages. For example, you might hold 60% ownership and your partner holds 40%. Each person is entitled to a comparable portion of any income generated from the property and is responsible for the equivalent share of expenses. This option doesn’t allow for automatic right to survivorship.
Because property laws vary from state to state, Hunsaker said it's worth spending some time researching the rules where you live or even talking to a legal professional. That’s especially true if you plan to eventually marry your partner, she added.
Marriage Doesn’t Matter for Mortgage Qualification
You might be worried that you have a lower chance of getting a mortgage if you’re an unmarried couple. Fortunately, that’s not the case.
“Your marital status doesn't have an impact on whether or not you can get a mortgage,” Hunsaker said. “But it could impact how large and what type of mortgage you qualify for.”
It’s illegal for lenders to discriminate against you based on marital status.
When you apply for a joint loan, the lender will consider your combined income and savings, which can help you afford a larger down payment and mortgage. However, when it comes to your credit, lending decisions are typically based on the lower of your two scores, not an average. So if one partner has significantly better credit and finances than the other, it can be advantageous for that person to apply for a mortgage on their own—even if it means qualifying for a smaller mortgage.
Tax Benefits Are Better When You’re Married
On the surface, the tax breaks available to homeowners aren’t any different for single owners vs. married couples. However, there are a couple of benefits to owning as a married couple.
The first is simplicity, Hunsaker said. A joint tax return means everything is combined on one form, making filing and record keeping that much simpler.
Homeownership is also often the trigger that switches a taxpayer from using the standard deduction to itemizing the write-offs associated with their home.
“For many taxpayers, itemizing results in lower tax liability, especially if you are eligible for other deductions, such as charitable gifts,” she said. “Homeownership deductions for interest, taxes, and capital gains exclusions are still available to unmarried couples, but will require more effort to manage and declare.”
It Takes Careful Financial Planning
“If you are planning to purchase a home with a partner prior to marriage, I encourage you to think about the ‘what ifs’ of your relationship,” said Lauren Anastasio, director of financial advice financial technology company Stash, in an email to The Balance. For example:
- If you end up separating, what is your plan for the house?
- If one of you becomes disabled and unable to work, can the other afford the home on their individual income?
- If one partner passes away unexpectedly, will the other be able to stay in the property?
“How you answer these questions will direct you in your financial planning needs,” Anastasio said. “You both likely need to think about disability and life insurance coverage no matter how confident you are that your relationship can stand the test of time.”
Anastasio added that it’s crucial to have some transparent money conversations with your partner before buying. For instance, you should know each other’s credit scores and how they can impact the cost of your mortgage if you apply together. You should be on the same page about how you will share the costs of the purchase, from the down payment to closing costs.
Additionally, all cohabitating couples should have a shared household budget, Hunsaker said. There are many ways to manage this budget, she explained, but it should list all living expenses and clearly define who is on the hook for what.
Create a dedicated, shared account for major housing expenses regardless of whether you choose to maintain separate or combined finances.
“It's absolutely critical that both partners have visibility into the bills being paid,” Hunsaker said. “You don't want to find out the hard way that your [partner] wasn't paying the property taxes.”
Ultimately, there’s no perfect way to approach the financial management of homeownership with a partner you’re not married to. Just know that it may be a bit more complex if your finances aren’t already combined.
“Plenty of couples have success using dramatically different methods,” Anastasio said. “What is important is ensuring you are on the same page as your partner.”
Consider a Cohabitation Agreement
Most people don’t get into a serious relationship with the expectation that it will go south. But that certainly happens, whether a couple is married or not, and owning property together can complicate matters. That’s why it’s important to have some legal protection in place.
“Cohabitation agreements are a very good idea that can protect both parties,” Hunsaker said. These contracts address the details of owning property and other assets together as an unmarried couple. A cohabitation agreement covers who pays for what and how property gets split up in the event the relationship ends.
Since a cohabitation agreement is meant to be a binding legal document, it can be helpful to consult a lawyer when drawing it up.
What Happens if You Get Married?
If you and your partner eventually get married, you may wonder if you need to update the deed and mortgage to reflect this change in legal partnership.
Property ownership in marriage is often dictated by state law. In some states, your spouse may automatically hold legal ownership to the property once you’re married. In others, you may need to update the deed to reflect co-ownership (if that’s what you want). Hunsaker emphasized that community property states have different rules from common-law states, and in addition, every state has its own unique laws.
“Consult a tax planner or accountant to discuss the best way to structure your homeownership before you buy,” Hunsaker said. “They can also tell you how your state views your property, if you're bringing assets into a marriage.”
If a property is legally owned by one spouse before the marriage, it’s usually considered separate property and is not subject to division if the couple later divorces (though there are some exceptions).
When it comes to the mortgage, you can’t add your partner if you qualified for the loan on your own. However, you can refinance the mortgage under both of your names if you want to become co-borrowers after marriage. As a bonus, you may be able to qualify for a lower rate and lower your monthly payment.
The Bottom Line
Buying a home with a partner you’re not married to is definitely possible. However, you should keep in mind that you may have fewer legal protections if the relationship ends. Property rules vary by state, so it’s important to understand how the laws work where you live and consider bringing in an expert to help you navigate your options.
Frequently Asked Questions (FAQs)
What happens if two unmarried people buy a house together and split up?
If you didn’t sign a cohabitation agreement or other legal contract dictating ownership, you’ll need to rely on your state’s laws for how to handle the property. Usually, this process involves selling the property and splitting the proceeds after repaying any mortgage, selling costs, or liens. You can also choose to work out your own resolution without involving the courts.
Whose credit score is used on a joint mortgage?
If you decide to apply for a mortgage with a joint applicant, the lender doesn’t take an average of your credit scores. Instead, it will make a lending decision based on the lower of the two credit scores.
Should you wait until marriage to buy a house?
The decision to buy a home before or after marriage is personal. There are pros and cons to either option, so it comes down to your finances and goals as a couple. If you want to buy a home with a partner you’re not married to, it’s important to know your state’s laws and consult with legal and tax professionals before committing to a purchase.
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