Strategies and Tips for Unmarried Couples Buying a House
You’re not married, but you and your partner are considering buying a home together. According to the National Association of Realtors (NAR) Profile of Home Buyers and Sellers, unmarried couples make up around 17% of buyers within younger demographics like Gen Z.
Maybe you’re buying a new home before walking down the aisle, or maybe marriage isn’t in your plans at all. Either way, buying a house as an unmarried couple comes with financial and legal challenges that married couples simply don’t have to face.
Before you start browsing listings and attending open houses, here is everything you need to consider to protect your relationship, your credit, and your finances.
1. How Credit Scores Are Evaluated
When couples apply for financing, mortgage loans for unmarried couples are evaluated using the same financial criteria as those for married couples, such as income, debt-to-income (DTI) ratios, and employment history. However, there is no combined or average “couple’s score.” Your individual credit scores will be investigated.
In fact, mortgage underwriting uses a specific rule called “the lower of the middles.” When a joint mortgage application is submitted, the lender pulls three credit bureau scores (Equifax, Experian, and TransUnion) for both borrowers.
First, they find the middle score for each individual. Then, they use the lowest of those two middle scores to determine your mortgage eligibility and interest rate.
Why This Matters
If your credit scores fall into the “fair” or “poor” range, your mortgage will likely require a larger down payment and carry a higher interest rate.
If one partner’s middle score is dragging the application down, it often makes sense to apply for the mortgage under just one partner’s name. However, keep this vital catch in mind: if only one person applies, only that person’s income can be used to qualify for the loan.
If you need both incomes to afford the home, unmarried couples buying a house together should pause the house hunt and work on improving the lower credit score before moving forward.
2. Whose Name Goes Where? Mortgage vs. Deed
If you do decide to put only one partner on the mortgage loan, you need to understand the critical distinction between the mortgage and the property deed.
- The Mortgage: This is the loan agreement. Whoever is listed on the mortgage is 100% legally responsible for paying back the entire debt.
- The Deed (Title): This determines legal ownership. Whoever is listed on the deed legally owns the property.
It is entirely legal to have only one partner on the mortgage, but list both partners on the deed. However, you must be careful when co-buying house properties. If your partner is listed on the title but not on the mortgage, they are essentially being handed half a house and possess all the rights of ownership, but carry none of the financial liabilities.
Note on changing your mind later: The only way to remove someone from a mortgage is to refinance the loan completely. To remove someone from a title means one person has to buy out the other’s ownership share or sell the home entirely.
3. Navigating Different Types of Ownership
If both of your names are going on the property deed, you must choose how you will legally classify your joint ownership. There are three primary ways:
- Sole Ownership: Best for when only one party is on the mortgage and handles the entire financial burden alone, thereby retaining all ownership rights. If that partner passes away, the home is passed through their estate to their named beneficiary.
- Joint Tenancy: Ideal for couples splitting financial responsibilities 50/50. Under joint tenancy, both partners own equal shares of the home. If one partner passes away, their ownership automatically transfers to the surviving partner (known as the right of survivorship).
- Tenants in Common: This structure is built for shared ownership homes where partners own different percentages of the property. For example, if one partner contributes 70% of the funds and the other contributes 30%, the deed can reflect that split. If an owner dies, their percentage does not automatically go to the partner; instead, it goes to whomever they have designated in their will, which could be a parent, sibling, or child.
4. The Essential “Home Prenup”: The Cohabitation Agreement
When married couples divorce, the legal system provides a structured framework (such as equitable distribution principles) to divide assets fairly. Unmarried couples have no such safety net. If a relationship ends and there is no prior agreement, there is no family court process to fall back on, no presumption of equal ownership, and no automatic right to financial support.
To protect yourselves, we recommend working with a real estate lawyer to create a legally binding cohabitation property agreement. It might not feel romantic, but it is highly practical and serves as an excellent litmus test for your financial compatibility.
5. What Happens If We Break Up?
Anxieties around breaking up are normal, which is why a clear exit strategy must be written into your cohabitation agreement. What happens to a house when unmarried couples split usually comes down to three primary legal pathways:
- One Partner Buys Out the Other: One partner decides to keep the house. This requires refinancing the mortgage into that single partner’s name to remove the other’s liability, accompanied by a cash payout to the departing partner for their accumulated share of equity.
- Selling the Home: Both partners agree to put the house on the market, pay off the remaining mortgage balance, and split the net proceeds based on the percentages outlined in their deed or cohabitation agreement.
- The Partition Lawsuit: This is the “nuclear option.” If one partner refuses to sell and refuses to be bought out, the other partner can file a partition lawsuit to force a legal sale of the property through the court system. This process is intensely adversarial, time-consuming, and incredibly expensive.
6. Financial Risks to Keep on Your Radar
Beyond a relationship split, cohabitating couples must prepare for unexpected life events.
Income Loss
If both partners are on a mortgage, you are “jointly and severally liable.” This means the lender doesn’t care who pays, just that the mortgage gets paid. If one partner loses their job, suffers a disabling illness, or experiences an accident and stops contributing, the other partner is legally obligated to cover the entire sum.
Failure to do so leads to foreclosure, which will impact the credit of both individuals.
The Gift Tax Trap
Because unmarried couples are viewed as separate legal entities by the IRS, large transfers of money can trigger unexpected tax rules. The federal annual gift tax exclusion limit is $19,000 per recipient.
If one partner pays a full $50,000 down payment from their personal savings but puts both names on the deed, the IRS may view that as a $25,000 “gift” to the other partner. Because $25,000 exceeds the $19,000 annual exclusion limit, the partner who paid the down payment will be required to file a federal gift tax return (IRS Form 709).
While you likely won’t owe immediate taxes due to the high lifetime exemption, it adds complex paperwork to your tax season.
7. Handling Taxes as an Unmarried Homeowner
Unmarried couples cannot file their taxes jointly. When tax season arrives, you’ll need to decide how to handle home-related deductions like mortgage interest and property taxes.
If you both itemize deductions, you can each deduct the exact amount of mortgage interest and property taxes you personally paid. Alternatively, if one partner has a significantly higher income, it may benefit your combined finances to allow that partner to take all the deductions to maximize their tax relief.
Keep in mind that lenders typically only issue one copy of Form 1098, which tracks your annual mortgage interest. You and your partner will need to sit down, look at your bank statements, and manually calculate who paid what.
Don’t Lose Sight of Your Dream
Buying a home with your partner is a monumental step. Even if it feels trickier than doing it as a married couple, a clear plan makes it entirely achievable.
“When buying a home with your significant other, whether it be a spouse, fiancé, or boyfriend/girlfriend, it’s not uncommon for one partner to have a credit score lower than the other partner. If that is the case, don’t worry,” says Brenna Eshbach, Sr. Mortgage Originator at Diamond Credit Union. “Sometimes we can make a mortgage work in just one person’s name. If we can’t do so, we can still provide some guidance on the steps you need to take in order to qualify for a home of your own together.”
Ready to Start Your Journey?
The mortgage experts at Diamond Credit Union are here to help guide you through every step of your home-buying experience.
FAQs: Buying a House with Someone You’re Not Married To
Can Unmarried Couples Get a Mortgage Together in Pennsylvania?
Yes. Lenders evaluate unmarried co-borrowers using the same standard financial criteria applied to married couples, like credit scores, income, debt-to-income (DTI) ratios, and employment history. Both incomes can be combined to qualify for a larger loan. The difference is purely legal regarding how the property is titled and how assets are split if the relationship changes.
Do We Need to Speak to an Attorney?
While not legally required, it is highly recommended. For the actual real estate transaction itself, a single experienced real estate agent can easily streamline the process for both of you. Many legal professionals suggest that each partner consult their own separate attorney when drafting a cohabitation agreement. A single attorney cannot fully represent both parties’ interests if a conflict of interest arises.
What Needs to Change If We Get Married After Buying a House?
If you get married after your home purchase, you’ll want to update several documents to reflect your new legal status. This includes updating the deed, often changing ownership to a “Tenancy by the Entirety,” which offers robust legal protections for a spouse, updating your homeowners’ insurance policy, and revising utility accounts.
Can I Add My Partner’s Name to the Mortgage After Buying a House?
No, you cannot simply add a name to an existing mortgage. The only way to add your partner’s name to the loan is to go through the refinance process to replace your current mortgage with a new joint loan.