Buying a House With a Friend: The Mortgage, the Title, and the Exit Plan

More people are buying homes with friends, siblings, and partners they aren't married to. The math is simple: two incomes, two down payments, one house neither could afford alone. The legal and financial structure is less simple, and the time to work it out is before you're under contract.

To a mortgage lender, co-buyers are co-borrowers. Your incomes are combined, your debts are combined, and both credit reports are pulled. How the scores are used depends on the program — some use the lowest score among the borrowers, which means the friend with the weaker credit sets the pricing for both of you. Every borrower on the loan is jointly and severally liable: if your co-owner stops paying, the lender can collect the entire payment from you. Your marital status and your relationship to each other don't matter to the loan.

Conventional underwriting averages self-employed income from tax returns, which often understates it. If one co-buyer's income is hard to document, the whole application suffers. A bank statement program can qualify that borrower on deposits instead. See self-employed mortgage requirements for the full set of options.

When one buyer lives in the home and the other is primarily helping qualify, the second person is a non-occupant co-borrower. Some programs allow it, often with family-relationship requirements, so it's more common between parents and children than between friends. The rules are in non-occupant co-borrower. If neither of you will live there, it's an investment purchase, and a DSCR loan closed in an LLC is often the cleaner structure.

• Joint tenancy with right of survivorship: equal shares, and if one owner dies, their share passes automatically to the survivor. Clean for couples; often the wrong choice for friends who'd want their share to go to family.
• Tenants in common: shares can be unequal — 60/40 if one person put down more — and each owner's share passes through their own estate.
• An LLC: generally for investment property rather than a primary residence, and it changes which loans are available.

Titling rules and terminology vary by state, and the choice has estate and tax consequences. Make it with a real estate attorney, not at the closing table.

In San Francisco and a few other high-cost cities, tenancy-in-common ownership of small multi-unit buildings is a market of its own. Instead of one shared mortgage, specialty lenders offer fractional TIC loans, where each owner finances their own share and isn't liable for the others' loans. They're niche and priced above standard mortgages, but they solve the joint-liability problem when several unrelated households share one building. It's a cousin of the questions in co-op financing.

• Who contributed what to the down payment and closing costs, and how that maps to ownership shares.
• How the mortgage, taxes, insurance, repairs, and improvements are split.
• What happens if one person can't pay their share for a month — or six.
• Buyout terms: how the house is valued and how long the buyer has to refinance.
• Forced-sale and exit provisions, including a timeline and how disputes are resolved.
• What happens if one owner marries, moves, or dies.

Removing a borrower from a mortgage almost always means the remaining owner refinances in their own name and qualifies alone. If they can't, the options are a sale, a new co-borrower, or a buyout funded some other way. The process looks a lot like a divorce mortgage buyout without the court order, which is exactly why the agreement above needs to exist.

Thinking about buying with someone? Have each person send me their income situation and roughly where their credit stands. I'll tell you which program fits the pair of you and how the combined numbers look. Tax questions about splitting the mortgage interest deduction belong with a tax professional. Programs and requirements vary by lender.