Buying a House with a Friend

Buying a house with a friend is becoming an increasingly popular trend as rising home prices and economic challenges make solo homeownership less attainable. Many people are turning to this option as a way to share financial responsibilities, build equity, and enter the housing market sooner than they could alone. Beyond affordability, buying a house with friends offers a sense of community, shared upkeep duties, and greater flexibility in living arrangements. Be it for financial reasons or companionship, this trend is changing the way people approach owning a house today.

Talk Money First

Before jumping into buying a house with a friend, it’s important to have an open and honest conversation about finances. Everyone should evaluate their credit scores, debts, and financial goals to determine if they’re ready for the commitment. It’s not just about affording the mortgage; you’ll also need to factor in property taxes, maintenance costs, and unexpected repairs. To avoid potential financial strain, consider setting up a joint emergency fund. Being upfront about financial expectations is key to making co-ownership a smooth experience.

Figure Out the Best Ownership Setup

When thinking about buying a house with a friend, one of the biggest choices you’ll face is how to structure ownership. Joint tenancy is when both owners share equal parts of the home and automatically inherit the other’s share if they pass away. Tenancy in common allows each person to own different percentages and pass their share to whomever they choose. Some friends even set up an LLC to keep things organized and separate from their personal finances. Understand these options before buying a house with a friend so that everyone is on the same page and protected.

Getting a Mortgage Together

Can you buy a house with a friend and get a mortgage? Yes, but it’s important to understand that lenders will evaluate everyone’s financial history. Even if one person has a solid credit profile, a co-owner with a lower score can impact the mortgage terms. Some lenders offer co-borrower mortgage options tailored for friends, making it easier to get approved. It’s also a good idea to clarify who will be responsible for monthly payments and how those will be tracked to avoid complications later.

Put Everything in Writing

A buying-a-house-with-a-friend-agreement is essential to avoid misunderstandings. This legal document should clearly outline financial contributions, responsibilities, and what happens if one party wants to exit the arrangement. It should also cover topics like how major decisions will be made, maintenance duties, and rules around selling the property. Without a solid contract in place, co-ownership can become complicated, especially if unexpected life changes arise.

Find the Right Home

When buying a house with friends, choosing the right property is about more than just budget. Think about lifestyle preferences, potential resale value, and the need for private and shared spaces. A home with flexible layouts, like separate entrances or additional units, can offer more personal space and future rental opportunities. Get a thorough inspection and understand zoning laws that might affect your long-term plans. Finding a real estate agent familiar with co-ownership can help you with these considerations.

Set Some Ground Rules

Homebuying with friends can be rewarding, but it’s important to set clear expectations from the start. Discuss household responsibilities, from chores to bill payments and even things like guest policies and noise levels. Having regular check-ins and using apps to track shared expenses can help keep things running smoothly. When buying a house with a friend, a contract can make day-to-day living easier and prevent conflicts down the line.

What to Consider When Buying a House with Friends

Keep Communication Flowing

Communication is key when buying a house with a friend. It’s easy to assume that everyone is on the same page, but small differences in lifestyle or financial habits can cause tension over time. Regular discussions about finances, shared responsibilities, and future plans can help prevent misunderstandings and ensure a positive co-living experience.

Plan for the Unexpected

Life can be unpredictable, and having a plan for unexpected events is essential. Whether it’s job changes, personal relationships, or financial difficulties, buying a house with a friend agreement should cover how these situations will be handled. Having an exit strategy in place makes it easier to manage life changes without unnecessary stress.

Budget Beyond the Mortgage

A common mistake in buying a house with friends is focusing only on the mortgage payment while underestimating ongoing costs. Property taxes, maintenance, and unexpected repairs can add up quickly. Setting up a shared savings fund for these expenses ensures that everyone is financially prepared and avoids last-minute surprises.

Have a Conflict-Resolution Plan

Even the best of friends can have disagreements. Having a clear process to resolve conflicts. Some friends choose to include a mediation clause in their buying a house with a friend contract to help address disputes in a fair and structured way.

Think Long-Term

Buying a house with a friend isn’t just about the here and now—it’s a long-term commitment. Make sure you and your co-buyer are aligned on future goals, whether that means living in the home for years or eventually selling it for a profit. Setting clear expectations from the start can help avoid complications down the road.

Can you buy a house with a friend as a first-time home buyer? Absolutely, and it can be a smart way to share costs and responsibilities. REMAX can help by providing expert guidance on the home-buying process, helping you understand financing options, and connecting you with experienced real estate agents who can find properties that suit your shared needs.