Buying a home with someone other than a spouse is no longer unusual. Friends split a down payment, siblings inherit and keep a house together, unmarried partners buy before they marry, and parents co-sign or co-own with adult children. According to the National Association of Realtors’ 2025 Profile of Home Buyers and Sellers, married couples made up 61% of buyers, unmarried couples 6%, and 17% of all buyers purchased a multigenerational home. The share of first-time buyers fell to a record low of 21%, and the typical first-time buyer is now 40 years old.
Co-buying solves an arithmetic problem: two or three incomes qualify for a mortgage that one income cannot. But it creates a legal and financial entanglement that most buyers underestimate. Everyone on the loan is responsible for the entire debt, not just their share. Any co-owner can go to court and force a sale. And in most states, if the deed is silent about how you hold title, the law picks for you.
The good news is that nearly every problem in co-ownership is preventable with two decisions made before closing: choosing the right form of title, and signing a written co-ownership agreement drafted by a real estate attorney. This guide covers both, plus how lenders underwrite multiple borrowers, how taxes get split, and how to exit cleanly when someone’s life changes.
How you hold title
Four ways to own a home together
The words on your deed determine what happens when someone dies, gets sued, divorces, or wants out. This is a state-law decision, and the default is rarely what you want.
In most states, a deed to two or more unmarried people that doesn’t specify the tenancy is presumed to create a tenancy in common. For married couples in the roughly 25 states that recognize it, the default is often tenancy by the entirety. Because these presumptions vary and can be reversed by a single missing phrase, co-buyers should state the intended vesting explicitly on the deed rather than relying on the default.
The choice isn’t cosmetic. It controls whether a deceased owner’s share passes automatically to the survivors or goes through probate to their heirs, whether one owner’s creditors can reach the property, whether shares can be unequal, and how much of the property gets a stepped-up tax basis at death.
Title forms at a glance
Tenancy in common (TIC): The workhorse for friends, siblings, and unrelated co-buyers. Shares can be unequal (60/40, 25/25/25/25). There is no survivorship, so a deceased owner’s share passes by will or intestacy. Any owner can sell, mortgage, or will their share independently, and any owner can force a partition.
Joint tenancy with right of survivorship (JTWROS): Equal, undivided shares. When one owner dies, their share passes automatically to the survivors outside probate. Any joint tenant can sever the joint tenancy by transferring their interest, which converts that share to a tenancy in common. Only the deceased owner’s share receives a step-up in basis.
Tenancy by the entirety (TBE): Available only to married couples (and in some states registered domestic partners), in roughly 25 states plus D.C. Neither spouse can unilaterally sell or encumber the property. Its signature benefit is creditor protection: a creditor of only one spouse generally cannot force a sale. Protection varies by state, and Alabama doesn’t recognize TBE at all.
Community property and community property with right of survivorship: The nine community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Property acquired during marriage is presumed owned 50/50. The critical tax feature is the full step-up in basis at the first spouse’s death under IRC § 1014(b)(6) — both halves step up, not just one. The survivorship variant adds probate avoidance on top.
LLC, partnership, or trust: An LLC offers liability separation and a formal governance structure, which suits investment property. But it usually disqualifies you from owner-occupied conventional, FHA, and VA financing, pushing you into commercial or portfolio loans with higher rates and larger down payments. A revocable living trust preserves standard financing and is routinely accepted by Fannie Mae.
Financing
How lenders underwrite two, three, or four borrowers
Lenders add up everyone’s income but price the loan off the weakest credit profile — and hold every borrower responsible for the entire debt.
Whose credit score counts. Each borrower’s representative score is the middle of three bureau scores (or the lower of two). On a multi-borrower loan, the weakest profile drives pricing, so one co-borrower with a 640 can cost the group real money in rate even if everyone else is above 760. Fannie Mae removed its hard 620 minimum from Desktop Underwriter for casefiles created on or after November 16, 2025, replacing it with a holistic risk assessment, but individual lenders still apply their own minimums, so plan around overlays rather than the agency floor.
How income and debt combine. Lenders total the qualifying income of all borrowers and measure combined monthly obligations against it. A co-borrower with a high salary but heavy existing debt can lower your approval amount rather than raise it. Run the numbers with a lender before assuming a third person helps.
How many borrowers are allowed. Fannie Mae’s Desktop Underwriter supports a maximum of four borrowers per conventional casefile, and FHA loans run through DU are similarly capped. This is an automated-underwriting system limit, not a statutory one — more than four is possible through manual underwriting, but expect fewer lenders willing to do it.
Joint and several liability. Every borrower on the note is individually responsible for 100% of the debt. A 50/50 ownership split on the deed does not create a 50/50 obligation to the lender. If one owner stops paying, the lender can pursue the others for the full amount, the late payments appear on everyone’s credit report, and foreclosure threatens the entire property regardless of who was at fault.
On title, on the loan, or both. These are separate questions. You can be on title but not on the mortgage (you own a share, but you’re not liable to the lender, though the lien still encumbers the whole property). You can be on the mortgage but not on title, which is a co-signer. And a non-occupant co-borrower is on both but doesn’t live there — typically a parent helping a child qualify. For FHA, a non-occupying borrower transaction caps the loan-to-value at 75%, but rises to the full 96.5% when the borrowers are family members related by blood, marriage, or law. This is the structure often marketed as a “kiddie condo” loan.
VA loans need extra care. Adding a spouse or another eligible veteran is straightforward. Adding a non-veteran who isn’t your spouse creates a joint VA loan: the VA guaranty covers only the veteran’s portion, so lenders typically require a down payment on the non-guaranteed share, and the loan needs VA prior approval.
2026 loan limits. The baseline conforming limit for a one-unit property is $832,750, with a high-cost ceiling of $1,249,125 (and higher baselines in Alaska, Hawaii, Guam, and the U.S. Virgin Islands). The FHA one-unit floor is $541,287 with a ceiling of $1,249,125. Both took effect January 1, 2026. See our guide to financing options for how these limits interact with down payment strategy.
The document that matters most
Write the co-ownership agreement before you close
A $500 to $1,500 attorney-drafted agreement is the cheapest insurance in the transaction. A contested partition lawsuit averages around $20,000.
A co-ownership agreement (also called a tenancy-in-common agreement) is a private contract among the owners. It doesn’t change what the lender or the county recorder sees; it governs how you treat each other. Attorneys typically charge $500 to $1,500 to draft or review one, and it should be signed before closing, while everyone is still cooperative and no one has leverage.
At minimum, the agreement should address ownership percentages and how they were determined, who pays the mortgage, property taxes, insurance, HOA dues, utilities, routine maintenance, and capital improvements, and how a major repair gets approved and funded. It should set decision-making rules — what requires unanimity versus a majority — along with occupancy rights and whether an owner may rent out a room or the whole property, and how that income is divided.
Just as important is the exit machinery: a cure period and remedy if someone can’t pay, a right of first refusal so remaining owners can buy a departing owner’s share, a defined valuation method for a buyout (usually an appraisal process with each side naming an appraiser), a minimum hold period, and a private forced-sale process that substitutes for a court partition. Finally, spell out what happens on death, disability, divorce, or a breakup, and require mediation followed by binding arbitration for disputes, with a prevailing-party attorney’s fee clause.
What goes wrong without an agreement
Partition actions. Any co-owner in a tenancy in common or joint tenancy can ask a court to divide the property or, far more commonly for a single house, force a sale. An uncontested partition typically runs $5,000 to $15,000 and takes 6 to 12 months; contested cases run $15,000 to $25,000 or more. Costs come out of the sale proceeds.
Heirs property. The Uniform Partition of Heirs Property Act gives non-partitioning co-tenants the right to buy out the owner who filed, at appraised value, and requires an open-market sale rather than a courthouse auction. It has been adopted in 24 states plus D.C. and the U.S. Virgin Islands, with Michigan and New Jersey enacting it in 2025. It applies only where there is no written agreement — which is precisely why having one matters.
Liens, judgments, and bankruptcy. A judgment or tax lien against one co-owner attaches to that owner’s fractional interest and can cloud title or trigger a forced sale. Property held as tenancy by the entirety is generally shielded from one spouse’s individual creditors; tenancy in common is not.
Death without a will. Under joint tenancy or tenancy by the entirety, the share passes automatically to the survivors. Under a tenancy in common, it passes by intestacy — and you may suddenly co-own your home with an estranged relative or a stranger.
Taxes and insurance
Splitting the deductions, and covering everyone
Lenders issue one Form 1098 no matter how many owners there are. The IRS lets each owner deduct what they actually paid — if you document it.
Mortgage interest and property taxes. Each co-owner deducts the interest and property tax they personally paid. The borrower named on the Form 1098 reports their share on Schedule A line 8a; other co-owners report theirs on line 8b as interest not reported on a 1098, attaching a statement identifying who received the form. IRS Publication 936 and Publication 530 cover the details. Interest is deductible on up to $750,000 of acquisition debt, and for unmarried co-owners that limit generally applies per taxpayer. Keep bank records showing who paid what.
The SALT cap. The state and local tax deduction cap rose from $10,000 to $40,000 for 2025 and $40,400 for 2026, increasing about 1% a year through 2029 before reverting to $10,000 in 2030, with a phasedown at higher incomes. This meaningfully changes the math on property taxes in high-tax states.
Capital gains on sale. Each owner who meets the ownership and use tests — owning and living in the home for two of the previous five years — can exclude up to $250,000 of gain under Section 121. Because the exclusion is per taxpayer, unrelated co-owners who each qualify can shelter more combined gain than a single owner could.
Unequal contributions and gift tax. If one person contributes more cash but everyone takes equal title, the difference can be a taxable gift. The 2026 annual gift tax exclusion is $19,000 per recipient, and the lifetime estate and gift exemption is $15 million, so most family help requires a Form 709 filing at most rather than actual tax. The cleaner approach is to align ownership percentages with contributions, or document the excess as a loan with a promissory note.
State reassessment traps. In California, transferring a partial interest or terminating a joint tenancy can trigger a Proposition 13 reassessment of the transferred fraction, and Proposition 19 narrowed the parent-child exclusion considerably. Model the property tax consequence before any transfer of a share. Other states have their own transfer tax and reassessment rules.
Insurance. Every owner on the deed should be a named insured on the homeowners policy — Fannie Mae’s Selling Guide requires the policy to name all persons holding title. An unnamed co-owner generally cannot file a claim even though they own part of the house, which is a common reason claims get denied. A resident who isn’t on the deed can be listed as an additional interest, but that provides notice, not coverage. With multiple owners sharing liability exposure, an umbrella policy is worth pricing, particularly if any part of the home is rented. Confirm that your owner’s title policy reflects all co-owners and the exact vesting.
Step by step
The order of operations
Most co-buying failures trace back to doing these steps out of sequence — usually leaving the agreement until after closing, when it never gets written.
Start by aligning on goals and a time horizon. How long does each person expect to stay? What happens if someone gets a job offer in another state, gets married, or has a child? Then exchange full financial disclosure — credit scores, income, debts, and savings — because the weakest credit and the highest debt load will shape everyone’s rate.
Next, get pre-approved jointly so you know the driving credit score, the combined debt-to-income ratio, and the realistic price range. Choose the title form with an attorney, and have that attorney draft the co-ownership agreement while you’re still shopping, not after you’re under contract. Document every dollar of down payment contribution: lenders verify the source and seasoning of funds, and money from anyone not on the loan is treated as a gift requiring a gift letter.
At closing, all borrowers sign the note and security instrument, all title-holders appear on the deed, and all owners should be named on the insurance policy. The Closing Disclosure will list every borrower and the loan terms. First-time buyers should check program rules carefully — many state and local assistance programs require all occupying borrowers to be first-time buyers and apply income caps to combined household income.
Alternatives worth considering
Straightforward joint ownership isn’t the only structure. Equity-sharing arrangements let an investor or family member supply down payment capital in exchange for a share of future appreciation. A documented family loan at the IRS applicable federal rate avoids gift treatment while keeping title simple. Fannie Mae’s occupancy rules (Selling Guide B2-1.1-01) treat a parent buying for a disabled adult child who can’t qualify, or a child buying for a parent who can’t qualify, as owner-occupied — unlocking owner-occupied rates and low down payments even though the borrower won’t live there. Shared-equity homeownership programs and community land trusts cap resale prices in exchange for a subsidy, which is a different trade than co-ownership with a friend. Several companies now facilitate co-buying with software and specialist referrals, including Nestment, CoBuy, and Pairadime; Pacaso operates in the same space but focuses on luxury second homes rather than primary residences. None of these replace an attorney-drafted agreement.
Quick answers
Buying with multiple owners: common questions
How many people can be on one mortgage?
Fannie Mae’s automated underwriting system supports a maximum of four borrowers on a conventional loan, and FHA loans run through the same system are similarly capped. This is a technology limit rather than a legal one — a lender can manually underwrite a loan with more than four borrowers, but fewer lenders are willing to do it and it takes longer. There is no limit on how many people can be on the deed, so a fifth co-owner can hold title without being on the loan.
Do all owners have to be on the mortgage?
No. Being on title and being on the mortgage are separate. Someone can own a share of the property without being liable to the lender, and someone can be liable on the loan without owning any share (a co-signer). Keep in mind that the lender’s lien encumbers the entire property regardless of who signed the note, so a foreclosure affects every owner.
What happens if one co-owner stops paying?
Because mortgage liability is joint and several, the lender can pursue any borrower for the full payment. The missed payments appear on every borrower’s credit report, and continued nonpayment can lead to foreclosure of the whole property. A well-drafted co-ownership agreement handles this with a cure period, the right of other owners to advance the funds, and a credit or increase in their ownership percentage to compensate them.
Can one owner force the sale of the house?
Yes. Any co-owner in a tenancy in common or joint tenancy can file a partition action asking a court to divide the property or order a sale. For a single-family home, physical division is almost never practical, so courts order a sale. It’s slow and expensive — commonly $5,000 to $15,000 uncontested and $15,000 to $25,000 or more contested, over 6 to 12 months. A co-ownership agreement with a buyout mechanism and right of first refusal is designed to keep you out of that courtroom.
Should we own as joint tenants or tenants in common?
It depends on whether you want survivorship and whether shares are equal. Joint tenancy passes a deceased owner’s share automatically to the survivors and avoids probate, but requires equal shares and means you can’t leave your share to your own heirs. Tenancy in common allows unequal shares and lets each owner will their interest to whomever they choose, but the share goes through probate. Most friends, siblings, and business-minded co-buyers choose tenancy in common; couples who want automatic survivorship often choose joint tenancy or, if married in a community property state, community property with right of survivorship.
How do we split the mortgage interest deduction?
Each co-owner deducts the interest and property taxes they actually paid. The lender sends one Form 1098 naming a single borrower, who reports their share on Schedule A line 8a. Other co-owners report their share on line 8b as interest not reported on Form 1098 and attach a statement naming the person who received the form. Keep clear payment records — bank transfers from each owner’s account are the easiest proof. IRS Publications 936 and 530 have the rules, and a CPA is worth the fee in the first year.
How do we remove someone from the mortgage later?
A quitclaim deed transfers ownership but does not remove anyone from the debt. To release a co-borrower from liability you generally need to refinance in the remaining borrower’s name, which requires that person to qualify alone and costs roughly 2% to 6% of the loan amount in closing costs. FHA, VA, USDA, and adjustable-rate loans may allow an assumption with a formal release of liability, typically with a fee around 1% of the balance. A divorce decree does not bind the lender.