How to Buy a House Together If You’re Not Married
Can you buy a home together in Charlotte if you are not married? Yes, you can — but there are some important considerations to think about first.
Whether you’re trying to save money on housing, investing in real estate, or just not interested in marriage, buying a house with someone you’re not married to is a big decision. But as long as you take precautions, you and your partner can enjoy the benefits of joint homeownership.
Here, we’ll go over the basic steps to buying a house with someone you’re not married to, what the relevant mortgage laws are in North Carolina, and what pitfalls you need to watch out for.
How to prepare for the purchase
Before you commit to this big financial decision, take a moment to understand the pros and cons of a joint mortgage application.
Coborrowers and joint mortgage applications
People often buy a home by themselves or with their spouse. But if you want to buy with a pal, a sibling, or a boyfriend or girlfriend, you can.
Instead of applying for a joint mortgage together as a married couple, two unmarried people will apply as coborrowers.
Pros: Applying for a joint mortgage means you can also use your combined incomes and assets to qualify for a larger loan. You’ll each be a co-borrower, and you’ll each be on the title.
Cons: With a joint mortgage, you’ll both be liable for the debt, even if one of you loses your job. Plus, the lender will look at the existing debt and credit score for both of you, so any negative reports could harm your application.
Another option is for one person to be the primary borrower, with the other as co-signer. In this situation, the lender would evaluate the loan based on the lead borrower’s income, credit score, debt, and other factors. Having a cosigner can help strengthen the mortgage application or secure a good interest rate if their credit history is good. It’s important to note that the second borrower would be on the loan but would not be on the title. In that case they would still be responsible for the debt if the primary borrower defaults.
Pros: The advantages of having one person be a cosigner is that it can help to balance the other borrower’s credit score.
Cons: On the other hand, if the lender is looking at one income instead of both incomes together, you might not qualify for as large a mortgage as you want. The cosigner is also at greater risk, since they’re responsible for the debt without having their name on the title.
Special considerations for buyers who aren’t married
You should both discuss finances, budget, and affordability. You’ll also need to decide whether both names will go on the title, because that affects the mortgage you get.
Married couples often have joint finances — that’s unlikely if you’re not married. In that case, you may not know the full extent of your partner’s incomes and debts, for example. How much can each of you afford to contribute to the mortgage? That might affect whether you decide to aim for a joint mortgage or not. If your incomes are wildly different, that imbalance could affect your ability to repay the loan should something happen to the other person.
It’s also a good idea to set up a budget and decide on the payment terms. Who will actually make the payment? Will you go 50/50, or each pay a proportion of the mortgage payment according to your income? What happens if the payment is late? And what if you want to sell or refinance, if you break up, or you get married? Knowing ahead of time how the mortgage process works will help you set expectations and develop a plan for the future.
Will both names go on the title? If you’re both going to be living together and sharing responsibility for the upkeep, it makes sense to add both names to the title. In legal terms, this would be “joint tenancy.” You each have legal rights, but you each also have legal responsibilities. This setup also provides for the property to go to the other person if one of you dies.
Another option is called “tenancy in common.” Under this arrangement, you each own a share of the property, but if one of you dies, that share does not pass to the other person. Instead, that share goes to the estate.
It’s a good idea to have a lawyer help you draft your ownership agreement so you each know your rights and obligations.
VA loans and FHA loans for unmarried buyers
If you are looking for a mortgage program, such as a veterans home loan or Federal Housing Administration (FHA) loan, the rules are a little different for unmarried couples than for married ones.
For example, VA-backed home loans are for U.S. veterans (and their spouses). You can get a joint VA loan with a coborrower you’re not married to, but it doesn’t work the same as it would if you were married. The VA-backed guarantee of the the loan only applies to the veteran’s portion of the home, not the non-veteran’s.
Your lender can help you determine how the details of your specific financial situation fit into one of these loan programs.
Choosing the right mortgage lender
No matter what your situation, finding the best mortgage lender is a very important part of the process. Friendly, communicative, and experienced mortgage professionals will be able to help you navigate the process of buying a home with someone you’re not married to. They’ll ensure you are well-informed and prepared about the process, and they’ll offer professional advice tailored to your situation.
At Fairway Mortgage of the Carolinas, we put people first. Contact us to learn more about your mortgage options, and let us help you and your co-buyer get to the closing table.