Buying a Home: What LGBTQ Couples Need to Consider

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Buying a home is an expensive and complicated endeavor for any couple, but it's often even more challenging for those in the LGBTQ community. Some of the legal and financial barriers historically faced by the community have started to fall away in the U.S., especially with marriage equality now the law of the land. But others persist, from discrimination in the homebuying process to lack of access to housing in the areas with the most legal protections. Here are some of the challenges LGBTQ couples should be aware of and how to cope with them.

Homebuying Challenges for LGBTQ Couples

While every couple and real estate market is unique, these are some common hurdles that can make homebuying harder for the LGBTQ community.

Income Disparities

Saving money is typically a greater struggle for LGBTQ people than the general population due to a history of discrimination and a pay gap, according to a report by financial services company UBS. Not only do LGBTQ people typically earn less, but institutionalized discrimination—such as the lack of access to federal marriage benefits until 2015—impeded financial progress and savings for same-sex couples.

This means it could be more difficult, and take longer, for LGBTQ couples to save enough for a down payment. If you're struggling to make homebuying a reality, consider working with an LGBTQ-focused financial planner.

Lack of Affordable Protected Housing

When considering location, LGBTQ couples may prioritize areas with a vibrant LGBTQ community and legal protections. However, without permanent federal law explicitly banning LGBTQ discrimination, and the proposed Equality Act stalled in the U.S. Senate, legal safeguards are a patchwork. Only some cities, states and counties have laws that protect LGBTQ people from discrimination, and homes in those areas aren't always affordable. President Biden has enacted executive orders that bolster LGBTQ protections, but those could be reversed by a future administration.

The areas that do have robust protections for LGBTQ people tend to be desirable urban areas with steep housing prices. According to a 2020 Zillow analysis, homes in areas with explicit LGBTQ protections typically cost $328,575, a staggering 63% higher than prices in areas without protections.

It doesn't help that home prices have increased in nearly every metro area since last year, according to the National Association of Realtors. Houses are also selling faster, with cash offers increasingly common, making it a tricky time for all homebuyers—but especially for LGBTQ couples who want to live in already-hot markets.

John Auten-Schneider and his husband David run Debt Free Guys, a personal finance blog with a focus on the LGBTQ community. "While it's frustrating to feel limited to where we can live solely based on our LGBTQ status, the truth is that most homebuyers need to balance their needs with their wants," Auten-Schneider says. He believes it's important to identify one to three must-haves, your most critical needs that can help narrow down your home search.

For some LGBTQ couples, Auten-Schneider says, living in an area with legal protections and community may be critical. He notes that there are plenty of cities worth considering that offer legal protections but are more affordable than the more commonly known LGBTQ-friendly cities. Additionally, keep in mind that some of the most LGBTQ-friendly places were once simply areas that the community could afford to live in—like The Castro in San Francisco, or Chelsea and the West Village in New York City. In other words, just because a place isn't extremely LGBTQ-friendly now doesn't mean it won't be in the future once the community becomes more prevalent.

"It's important to remember that if there aren't LGBTQ people who go into less LGBTQ-friendly places to force change, these places won't change," Auten-Schneider says.

Housing Discrimination

Previously, federal housing discrimination laws didn't consider LGBTQ people a protected class. That changed in February, when President Biden signed an executive order directing the U.S. Department of Housing and Urban Development (HUD) to interpret and enforce the Fair Housing Act in a way that prohibits housing discrimination based on sexual orientation and gender identity. This is a critical development, though Auten-Schneider points out the risk that it could be reversed by a future administration.

Make sure you're aware of your rights when house-hunting, and if you believe you've experienced housing discrimination, you should file a complaint with HUD's Office of Fair Housing and Equal Opportunity. You can do this online, by email, by phone or by mail; information on each option is available on HUD's website. You may also want to use a realtor who's a member of the National Association of Gay & Lesbian Real Estate Professionals.

How to Prepare for Homeownership

A home may be the largest purchase you ever make, and it's made more complicated and costly with various fees, taxes and insurance requirements. Because homeownership carries significant responsibility, lenders have strict eligibility requirements for borrowers.

To improve their chances of qualifying for a mortgage, LGBTQ couples may want to take these steps to get ready for homeownership:

  • Save for a down payment. One of the best things prospective homebuyers can do is to start saving money, Auten-Schneider says. Some mortgages allow for low down payments, though they typically require paying mortgage insurance in exchange.
  • Improve your credit. In addition to helping you get approved for a mortgage, having a strong credit score can nab you a lower interest rate, which will save you money over the life of your loan. Check your credit and see if there's any room for credit improvement before applying for a mortgage. Look for debts you can reduce, and make sure you keep paying every bill on time in order to protect your scores.
  • Reduce your debts. Lenders also consider your debt-to-income ratio, which compares your debt payments to your income. If you're already overextended, lenders may not approve you for additional debt. To improve your chances of getting a mortgage—and to better handle the responsibility of making payments—make progress on paying down other debts first.
  • Determine what you can realistically afford. When you get preapproved for a mortgage, a lender will estimate how much they'll let you borrow based on your creditworthiness and other factors. This estimate helps you in competitive markets, Auten-Schneider says, since it shows the seller you're serious and qualified. But the ability to be preapproved for a certain amount doesn't necessarily mean you should look for a house that costs about the same. In reality, a mortgage of the amount you're preapproved for could stretch your finances, especially with the other costs of homeownership, such as ongoing maintenance, repairs, taxes and insurance. Take a close look at your monthly expenses and calculate how much you can really afford in monthly mortgage payments; make sure you don't bite off more than you can chew.
  • Get legal ownership in writing. Homeownership can be straightforward if you're a married monogamous couple, but it's not always so simple. "Depending on the dynamic of your relationship, and especially if you're in a polyamorous relationship, draw up the contracts to be clear on who owns and owes what," Auten-Schneider says. "Your real estate agent should be able to refer you to a legal advisor."

Get Prepared With a Credit Check

The process of buying a home can be expensive and overwhelming, especially with the additional challenges LGBTQ couples may face. Before you apply for a mortgage, make sure you both check your credit, which you can do via AnnualCreditReport.com or for free directly through Experian. Go over your credit reports as well as your scores to determine if there's room for improvement and to get an idea of what a lender will see when you apply.

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