More people are buying a home with a friend. Here's what to know

Buying a house with a friend may be an option you're considering if you're ready to buy a house but it seems out of reach financially on your own. In recent years, more and more people are buying homes with someone they're not in a relationship with. According to a 2023 Zillow report, most buyers (62%) purchased their home with at least one other person – and of those people, nearly a third said they co-bought with a friend or relative.

A co-ownership mortgage or joint mortgage is a mortgage loan that's signed by two or more people (whether friends, couples or otherwise). Each person on the mortgage is responsible for the borrowed money and has an ownership share in the property that's associated with it.

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Before getting a mortgage together, you may want to work out a few legalities regarding the title to the home. Setting up a co-ownership agreement could save you time and headaches when buying with a friend. Two common options on how to hold the title include tenancy in common and joint tenancy.

You can own a home with friends as tenants in common, which means each person owns part of the home — though not necessarily equal shares. So, say you buy a home with three friends, but you make the majority of the down payment . You might structure a tenancy in common (TIC) agreement so that you own 40% of the home and your three friends each own 20%.

With tenancy in common, you can sell your ownership stake at any time, and you don't need your friends' approval first. If you sell your share of the property to someone else, they assume responsibility for this part of the mortgage. Or if a tenant in common passes away, then their ownership share is passed on to their heirs.

You could opt for joint tenancy in which all joint tenants in a property own it equally. In this scenario, if you want to sell your share of the property, you must get the other owners' approval first. And if a joint tenant passes away, their ownership stake gets passed on to the remaining joint tenants.

Review your finances to determine what each of you can afford to pay toward buying a home. This includes the mortgage payment, maintenance and utilities, as well as the down payment and closing costs.

A lender will require both you and the co-borrower(s) to meet the requirements set for joint mortgage approval. That includes credit score , income requirements and debt-to-income ratio guidelines. Shop around and talk with several lenders, such as Ally Home , to learn about mortgage options and decide which type of loan is best for your personal circumstances.

It could also be helpful to get pre-approved for a mortgage (this lets sellers know you’re ready to buy and able to do so) before you start seriously searching for homes .

Before you get too far into the joint homebuying process, here are a few things to consider.

Co-buying a home could beat renting if you’re able to save money on housing costs. You may also benefit from being able to share responsibilities for maintenance, repairs and upkeep instead of having to do all of it yourself. On the flip side, you’re counting on someone else to pay their fair share. If you can navigate the potential risks, buying a home with someone else certainly could be worth exploring — especially if homeownership is a goal for you both.