Understand how your mortgage application will be considered

If you apply for a mortgage jointly with someone else, whether you are married or not, lenders evaluate your mortgage application as co-borrowers. Collectively, you’ll need to have enough income to make the payments and demonstrate that you’ll be able to make payments in the future. If one person doesn’t have an income or doesn’t have much income, that’s okay as long as the other person has enough. 

Lenders typically use the credit scores of the person with the lowest credit scores to evaluate the mortgage application.

If one person has a low credit score, you can apply for the mortgage without that person, but then the lender typically won’t consider that person’s income.

Talk about how you will share the responsibilities of the mortgage

When you buy a home together, you and your co-borrower are jointly responsible for paying the mortgage. Each of you is on the hook to pay the whole amount, even if you have a different agreement between yourselves. If you agree to split the payment 50/50, but one person is short on money one month, the other person will have to cover the difference. If they don’t, the payment will be recorded as incomplete, and the credit of both borrowers may suffer. 

There are many ways to manage your financial responsibilities, no matter what your relationship. What’s important is that you talk about it in advance and have the same expectations.

Understand what will happen if one person wants to move out someday

There’s one big difference between buying and financing a home with a spouse versus someone you’re not married to. If you’re married and one day you split up, you and your spouse will have to figure out what to do about the home and the mortgage as part of the divorce, or a court will decide for you. 

If you’re not married, there’s no divorce process. You’ll still own a home together—and are still responsible for the mortgage together—until you do something to legally change that. Of course, it’s hard to know now exactly how you would want to resolve things in the event that one of you wants to move out one day. A lot will depend on your personal and financial circumstances at the time. But it’s important to think about and agree in advance how you will decide what to do if you were to part ways. Consider contacting a lawyer to help you write a contract that specifies what the options are and who has what responsibilities. The contract can also specify how you will resolve problems. 

No matter what, it’s important to at least understand your options. Here are a few common ways people deal with the situation when co-borrowers want to part ways:

Sell the home – You put the home up for sale and everyone moves out. Until the home is sold, and the mortgage is paid off, you and your co-borrower are still jointly responsible for making the mortgage payments on time each month. Once the home is sold, the proceeds will go first to pay off the mortgage; any remaining proceeds are divided, and everyone goes their separate ways. If you are unable to sell the home for at least as much as the mortgage, you and your co-borrower may not be able to sell the home at all. 

One person moves out and lets the other borrower keep the home – If one co-borrower wants to keep the home, the one who wants to leave can sign over their ownership share to the remaining borrower. This is particularly common as part of a divorce settlement or separation agreement. If there is equity in the home, the person who is staying may need to “buy out” the person leaving. In this situation, the person who wants to stay pays cash to the person who wants to leave in exchange for their share of the ownership. 

Signing over the ownership of the home doesn’t change the joint responsibility for the mortgage.

Here are some considerations to keep in mind:

• The remaining borrower should refinance the mortgage in their name only. If they can’t qualify for and afford the mortgage on their own, the best solution is usually to sell the home. If the amount still owed on the mortgage is close to or more than the value of the home, it may not be possible for the remaining borrower to refinance the loan.
• If the remaining borrower doesn’t refinance, both borrowers’ credit could suffer if the mortgage payments are not made on time.
• It may be difficult for the person who leaves to get a new mortgage while their credit reports show that they are still responsible for the old mortgage.  

It’s important to keep in mind that home prices don’t always go up. If the value of the home goes down, the home may become “underwater,” meaning that the home value is less than the amount owed on the mortgage. In this situation, it may be impossible either to sell the home or for one borrower to refinance. If one borrower moves out without a change in the loan, both borrowers are still legally responsible for the mortgage. If the person staying doesn’t make the payments, the home could go into foreclosure, which would affect the credit history of both borrowers.

Be aware of the types of ownership available in your state and consider getting legal advice

When you buy a home with someone else, the legal owners will be listed on the title, deed, or ownership documents. Depending on your state law, there are several different ways that property can be titled. The type of title defines the ownership rights in a home, for example, what happens when someone dies, or wants to sell or transfer their ownership share. The type of title can also define who can make decisions about the property, such as taking out a home equity loan.

Keep in mind that property, marriage, and inheritance laws differ widely from state to state. Your rights and responsibilities also change depending on how the property is owned and titled. Not all states offer all kinds of titles or define them in the same way. Depending on the state, some types of titles may have different implications based on whether you are married or not. Some states, known as “community property states,” have special rules for married couples. 

The following information about titles is provided to give you a very basic idea of the types of ownership. It is not intended as a substitute for legal advice. Laws vary from state to state. Consider consulting with a real estate lawyer for advice on your specific situation. It’s important to make sure that you understand the benefits and drawbacks of the ownership and title options available in your state. 

Joint tenancy with right of survivorship – This type of title is the most common choice among married couples, but you do not have to be related to use joint tenancy with right of survivorship. The ownership of the property is equally divided among the co-owners. In the event of one owner’s death, their share of ownership automatically passes to the other owner.

Tenancy by the entirety – This type of title is typically available only for married couples (and, in some states, civil unions or registered domestic partners). It is similar to joint tenancy with right of survivorship, but has additional restrictions and protections. Neither spouse can sell, transfer, or take out a mortgage on the property without the other spouse’s consent. Tenancy by the entirety is not available in all states.

Tenancy in common – This type of title allows you to decide how much of the property is owned by each person. For example, it could be 50-50 or you could own 70 percent of the home while the other person owns 30 percent. Each owner can sell or transfer their ownership share. If one owner dies, their ownership share will be distributed according to their will or state inheritance laws.

Shopping for a mortgage on your own, even when you’re together

Relationships can be complicated, and there are many ways to manage finances as a couple, regardless of whether you’re married. Some couples choose to join their finances completely, others choose to keep them completely separate, and many more choose a hybrid. Just because you’re together doesn’t mean that you have to buy a home together if it doesn’t make sense for you.

Some people may be in a relationship and ready to buy a home, but not ready to buy a home with their partner. Perhaps the partner is not financially ready to buy, or perhaps you have other reasons why buying a home together might not be a good idea. If you’re in this situation, you can consider buying a home on your own while maintaining your relationship. You and your partner can decide who will live in the home and pay toward the mortgage—but if the home and the mortgage loan are in your name, they are your financial responsibility.

Married people can also get a mortgage and own property in one person’s name only, if that makes sense for them. Of course, if you want to get a mortgage in your name only, you’ll have to be able to qualify for the mortgage on your own, using only your income and credit history. Lenders are not allowed to discriminate against applicants because they are married but want to get a mortgage on their own. However, if you live in a “community property state,” the property may be presumed to belong to both you and your spouse, even if the mortgage and title are in your name only.

It may be possible to put a spouse or partner’s name on the deed or title to the home, even if the mortgage is in your name only. However, there are risks that you should carefully consider, and you may want to consult a real estate lawyer. For example, the other person could have ownership rights to the home, including the ability to take out a loan on the property or sell their share of the home independently (depending on the type of ownership).

If you’re considering buying on your own while in a relationship, it’s just as important to have a frank conversation with your partner about expectations as it would be if you were buying a home together. Here are some questions to start your conversation:

Questions to consider

• Will your partner help pay the monthly mortgage payments, or will that be your responsibility alone?  
• Would you be able to handle the mortgage payments on your own for at least a few months, if you needed to? 
• If you break up, what will happen? Will your partner simply pack their bags and move out? Will you owe any money to your partner for their contributions to the payments/home?
• If your home value increases, will your partner receive a share of that appreciation if you break up or decide to sell the home? 

Just as when you’re buying together, it’s a good idea to write down your answers to these questions, and you may want to put those answers in a formal agreement. That way everyone remembers and is accountable to the agreement in the same way. You may want to talk with a real estate lawyer to make sure you understand exactly how the laws in your state work. A lawyer can also help you draw up a written agreement that clearly spells out who is contributing what and how things will be resolved if you decide to split up down the road. Legal advice and a written agreement can help to protect you and your partner.

Similarly, if your spouse or partner is considering buying a home on their own, it’s important to understand the risks for you, as the spouse or partner whose name is not on the title. If you are the person whose name is not on the title and you don't live in a community property state, you will have fewer rights to the property. If you’re not married, you may have no rights to the property. If your partner decides to sell the home, or loses it to foreclosure, you will likely have to move. It’s a good idea to have an honest conversation with your partner about expectations and consider consulting a real estate lawyer to understand your rights.

What everyone should know

Regardless of your relationship status, shopping for a mortgage for your first home can feel intimidating.

If you’re thinking about becoming a homeowner this year, we recommend checking your credit as soon as possible. This is the first step toward building a strong financial foundation for your home. If you’re buying with someone else, check your credit and review the reports together.

Before you begin shopping for your new home, we also recommend taking time to track your current spending and budgeting for your down payment and other expenses. It’s crucial to review your finances so that you know how much home you can afford. And for couples, reviewing your finances together is a great way to avoid any surprises and make sure you are both on the same page with your budget and financial goals.