Buying a Home With Friends or Family: What You Need to Know
Quick Answer
To co-buy a home with friends or family, you’ll need to get approved for a joint mortgage. You’ll also need to decide on an ownership structure and be prepared to share the responsibilities. This path to homeownership has unique pros and cons.
The cost of purchasing a home can be a real roadblock for first-time buyers. As of May 2025, the median home price in the U.S. was $422,800, according to the National Association of Realtors (NAR). With those high costs in mind, one path forward for some homebuyers is to co-buy with friends or family.
Co-buying a home with someone you know could significantly reduce your costs, but it doesn't come without risk—especially if things don't go as planned. Let's talk about the pros and cons of co-buying a home with someone who isn't your spouse.
Can You Buy a Home With Friends or Family?
Assuming you both meet the mortgage lender's eligibility requirements, there's nothing stopping you from going 50/50 on a house with a friend. You could divide your ownership stake and costs even further by co-buying a home with multiple friends or family members. In 2024, 9% of homebuyers made the purchase with a relative, according to Zillow; 7% did it with a friend.
Buying a home with friends or family isn't all that different from getting a joint mortgage with a spouse. The mortgage lender will consider the financial health of all applicants. If they approve a joint mortgage, you and your fellow co-owners will be responsible for making the loan payments, covering property taxes and homeowners insurance premiums, and maintaining the property.
What to Consider Before Buying a Home With Friends or Family
Co-buying a home with family members or friends is a big decision that will commingle your finances, for better or worse. Here are some important things to think about before deciding one way or another.
Legal Structure and Ownership Agreement
If you're interested in co-ownership, consider how you and your co-buyers will divide your ownership stakes. This is typically done in one of two ways: using tenancy in common or joint tenancy.
| Tenancy in Common | Joint Tenancy | |
|---|---|---|
| How does it work? | Allows you to divide ownership any way you all see fit. For example, someone who puts in more money might have a larger ownership share (and vice versa). The home can be occupied in an equitable way. | All co-owners have an equal ownership stake in the home, no matter how much each person pays toward the home. They also have equal access to the home. |
| Do you need approval from the other co-owners to sell your ownership position? | No | Yes |
| What if one co-owner passes away? | Their ownership share will go to their heirs. | Their ownership share will be passed to the other co-owners (instead of their heirs). |
Financial Compatibility and Credit Health
Mortgage lenders will consider the financial health of all applicants before approving a joint home loan. If one of your co-buyers has modest funds, poor credit or a spotty employment history, it could make it difficult to get approved. Consider the following when applying for a joint mortgage:
- Minimum credit score requirements: These vary based on the type of mortgage you're applying for, but you'll likely need a score of 620 or higher for a conventional mortgage.
- Debt-to-income ratio (DTI): Your DTI is the percentage of your gross monthly income that goes toward debt payments. Mortgage lenders typically prefer a DTI that's less than 43%.
You'll want to make sure that you and your co-borrowers are on the same financial page. At the end of the day, the mortgage, property taxes and homeowners insurance all need to get paid. If one co-owner falls short, the others will have to step up to prevent any missed payments.
Down Payment and Ongoing Expenses
You and your co-buyers will need to save enough money to cover the following upfront costs when buying a home:
- Down payment: Minimum down payment requirements vary depending on the type of home loan you're seeking. It's possible to get a conventional loan with a down payment as low as 3%, or 3.5% if you opt for an FHA loan. You'll likely be on the hook for mortgage insurance if you put down less than 20%.
- Closing costs: These are various fees you'll need to pay when finalizing your home loan. They typically include a loan origination fee, appraisal fee, costs associated with title search services and more. You may also need to prepay a portion of your homeowners insurance premiums and property taxes. Closing costs generally add up to 2% to 5% of the sale price. You may also need to cover your real estate agent's commission fee.
Learn more: The Complete Guide to Closing on a House
Your Living Situation
You and your potential co-buyers will need to clarify what the living situation will look like. Whether you opt for a joint tenancy or a tenancy in common, you can expect all co-owners to have equal access to the property. That might mean:
- Sharing the space as a primary residence
- Using the property as a shared vacation home
- Renting out the home as an investment property
Clarifying your expectations together before co-buying can help you avoid conflict later down the road.
Pros and Cons of Buying a Home With Friends or Family
Just because you can buy a home with friends or family, doesn't necessarily mean you should. You'll want to consider the potential upsides and drawbacks before making a decision.
Pros
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Your upfront costs will be less. Instead of covering an entire down payment yourself, you'll be able to split that responsibility with your co-buyers. Alternatively, you could set a higher savings target and make a larger down payment, which will reduce your loan amount. You'll also be able to split your closing costs.
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You may be a more attractive mortgage applicant. It might be easier to qualify for a home loan if you're applying with other financially stable borrowers. That's because your lender will use your combined income when considering your loan application. It might even allow you to qualify for a larger loan amount.
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You'll have a lower housing payment. A monthly mortgage payment typically includes the principal loan amount (plus interest), homeowners insurance and property taxes—as well as mortgage insurance, if it applies. Splitting that payment could make a big difference in your monthly budget.
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You can save on maintenance and repairs. Whether you're updating the smoke detectors or replacing a broken water heater, keeping up with your home can be costly. One rule of thumb is to set aside 1% to 4% of your home's value for regular maintenance and repairs. Having other co-owners to shoulder the burden can reduce financial stress.
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It could be a good investment. Selling a co-owned property could lead to a cash windfall you can use to purchase another home on your own or with your partner. In this way, co-ownership might help grow your net worth.
Cons
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You're tying your finances to other people. Despite your best intentions, things could go south with you and your co-owners—whether you have a falling out or one of them stops carrying their weight financially. If you fail to make your mortgage payments, it could negatively impact your credit and potentially lead to foreclosure.
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You'll have to make housing decisions together. That can include everything from choosing an ownership structure to making home renovations to deciding when to sell. The property isn't entirely yours, which means you'll need to run things by the other co-owners.
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You may have to live with your co-owners. For co-ownership to make sense financially, you may need to share the living space. Having roommates isn't for everyone—and it can be difficult to change the terms of your arrangement once you have a mortgage together. With a joint tenancy, you'll need the consent of your co-owners to sell your ownership stake.
How to Buy a Home With Friends or Family
Here's a step-by-step guide to buying a home with family members or friends:
- Choose co-owners you trust. You'll ultimately want co-owners who are financially responsible and ready to be homeowners. That includes having good credit and steady employment. You should also share the same expectations and goals when it comes to buying a shared house.
- Iron out the ownership details. Will you opt for a joint tenancy or a tenancy in common? Consider which option makes the most sense for each of you, in financial terms as well as your ability to sell your ownership shares. Also clarify how much each person will contribute toward the purchase and how you'll divide ongoing expenses like home maintenance, repairs and potential renovations.
- Research mortgage lenders. Shop around and compare interest rates, loan types, eligibility requirements and customer ratings for multiple lenders. Input the estimated loan terms into a mortgage calculator to see how much your monthly payment can be. You can also zero in on lenders that have experience with co-ownership. Keep in mind that some lenders may have a limit on how many co-borrowers can be on a loan. Once you've chosen a lender, you can get preapproved for a mortgage and start house hunting.
- Apply for a joint home loan. The mortgage lender will evaluate each person's financial situation to ensure that they meet their eligibility requirements. That includes their income, employment, debt, assets and credit health. If everything looks good and the application satisfies the lender's underwriting standards, the joint mortgage will be approved.
- Keep the lines of communication open. Whether you've co-purchased a primary residence or a vacation home, it's a good idea to communicate regularly. You can use this time to discuss any changes to your financial situations, plans for home renovations or repairs, or if any co-owners want to sell their shares. The goal is to make decisions together and tackle any issues that may arise as a team.
The Bottom Line
Choosing to co-buy a house with friends or family is a big decision, but it could be the strategy that opens the door to homeownership for you. If you take this route, know that you're making a significant financial investment with other people—and it's possible that things could go sideways. That could have a negative affect on your credit score and finances if it results in missed mortgage payments or, at worst, foreclosure.
Whether you buy a home with others or do it on your own, your credit score will be an important factor that lenders consider. You can check your FICO® ScoreΘ and credit report for free from Experian to see where you stand and take steps to improve your credit if necessary.
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About the author
Marianne Hayes
Marianne Hayes is a longtime freelance writer who's been covering personal finance for nearly a decade. She specializes in everything from debt management and budgeting to investing and saving. Marianne has written for CNBC, Redbook, Cosmopolitan, Good Housekeeping and more.
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