Buying a home with a friend? What you need to know

You went halfsies at dinner out last weekend, shared your sourdough starter during the pandemic and split your iris tubers when the plant started taking over your flower bed. But buying a house with a friend? Turns out it could be a smart move if you're ready to buy a house but it seems out of reach financially on your own.

A co-ownership mortgage or joint mortgage is a mortgage loan that's signed by two or more people. Each person on the mortgage is responsible for the money you’ve borrowed and has an ownership share in the property that's associated with it.

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 their 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.

Yes — assuming they meet the requirements established by the lender to get approved for a mortgage. That includes credit score , income requirements and debt-to-income ratio guidelines.

Buying a house with a friend can help ease the financial burden to a degree, especially in a tough housing market. Rising home prices can make it more difficult to afford a mortgage, even when interest rates are relatively low. Meanwhile, saving thousands of dollars for a down payment and closing costs can be challenging, especially if you're paying off student loans and other debts.

So, it’s not surprising more people are choosing this ownership option. In fact, the number of people with different last names who bought homes together has increased by 771% since 2014 , suggesting people are increasingly open to the idea of buying a house with friends, roommates or other non-family members.

Start the homebuying process by discussing what type of home you're interested in and what area you'd like to live in. The goal is to make sure you're roughly in agreement about what you want.

The next step? Reviewing 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.

It’s also a good idea to discuss your credit scores, since they’ll help you gauge how likely you are to be approved for a joint mortgage. You should also 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 can 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 house-hunting, then connect with an experienced real estate agent who can help you scout out properties. Your agent can also walk you through the next steps once you make an offer on a home.

How specific you make this agreement is up to you and your co-owners. You can create a co-ownership agreement yourselves or hire a real estate attorney to help if you’re not sure what to include.

This approach can have its benefits, but it’s not for everyone. Before you get too far into the joint home-buying process, here are a few things to consider.

Buying a home with a friend 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 they were to get married, for example, or move to a new city out of the blue, you could be left in the lurch. So before buying a home with friends or roommates, consider how reliable they are and what kind of backup plan you might need in case things don’t work out.

If you’re comfortable sharing your mother’s secret salsa recipe or letting your best bud borrow your car, then purchasing a house together might be worth exploring — especially if homeownership is a life goal for you both, but personal financial situations have put it slightly out of reach. If you can navigate the potential risks, it can be a move that takes your friendship to a whole new level.