Buying your first home together is a significant milestone in a relationship. It’s an exciting time, particularly if both partners are first time home buyers. From a financial perspective, it may be even more significant (and complicated) than getting married. It’s not a decision that should be made without a good deal of planning and communication, especially in situations where one partner is the clear “breadwinner” and the other has little to no income.
50 years ago, this was simpler. Most couples that bought a house together were married. It was common for one partner to be the breadwinner and the other to be the “homemaker”. Today, it is much more complicated. More couples are buying houses before they get married (like Trish and I) and it is very common that either both partners work or the female in an opposite-sex relationship is the breadwinner.
With change comes new complications. What’s the right move when both partners want to buy a home, but one partner is bringing more to the table financially than the other?
Agree on a plan
Before you start going out and looking for houses you need to address the elephant in the room; the fact that one partner will be putting up the majority if not all the money to purchase the home. You both need to be crystal clear and accepting of how you choose to handle this issue.
The fundamental question is this; does the person putting up the money expect to be repaid over time?
If the answer is “no” and both parties have really thought about it and agree this is fair, the path forward is simple.
If the answer is “yes”, things are much more complicated. It’s important to agree on a detailed plan for how that will happen. If person “A” puts up $50,000 for the down payment and closing costs how exactly will person “B” pay them back, and when? Will person “B” pay them back $5,000 per year over the next 10 years?
This brings up new questions. The first of which, is it realistic to believe person “B” will ever be able to pay person “A” back? If both partners agree that partner “A” will be repaid, and partner “B” is unable or unwilling to follow through that could breed resentment on both sides.
Partner “A” may say to themselves “they promised to pay me back and they never did, and that pisses me off!”
Meanwhile, partner “B” is saying to themselves “they have always had more money than me, and now they expect me to fork over the little money I do have over to them? I thought we were a team?”
If the financial power dynamic is lopsided in the relationship money can be an uncomfortable topic to discuss. The person with the money might want to avoid discussing money because they don’t want to feel like they are rubbing this power imbalance in the other persons face. The person without money might want to avoid discussing money because they don’t want to feel like they are asking for permission every time they spend money.
The easy thing to do is just avoid having these types of conversations. The unfortunate irony is that it’s more important for couples with unbalanced financial dynamics to discuss money than couples where both couples make roughly the same amount of money.
It’s all about your relationship
A house is a financial asset. It’s also a home. Home should be a place of joy and comfort, not stress and obligation. Personally, I am trying to make my life simpler not more complicated. I wouldn’t want to buy a home with someone and make them feel like my tenant. Trish and I were lucky in the fact that we make roughly the same amount of money, so we split every joint expense 50/50. This is not the case for many couples.
So, does it make sense to buy a house when one partner is putting up all the money? It depends on your relationship.
If you’re the one who makes most of the money, ask yourself this question. When you think about the money in your relationship do you think of it as “your money” or “our money”?
If you think of it as “your money” don’t buy a house with someone if they can’t pay their half of the bills. You’ll be more likely to look at it as “your house” rather than “our home”. This will only put a strain on your finances and your relationship, especially if the other person fails to pay you back.
If you think of it as “our money” then you have cleared the first major hurdle. It “might” make sense to go ahead and put up the money for the home. If you choose to do this, you should go in with your eyes wide open knowing that this decision involves significant risk. Which is how it should be. It’s foolish to choose to spend your life with someone and not expect that to come with significant risk.
Frequently Asked Questions
Can you buy a house with a partner if only one of you has an income?
Yes. A mortgage lender qualifies the people who apply for the loan, so one partner can usually apply alone based on their own income, credit and debts. Whether the other partner can also be on the title depends on the lender and state rules, so ask before you apply. If only one name ends up on the title, the other partner may have no legal ownership stake unless you put a written agreement in place.
How should unmarried couples title a home they buy together?
The two most common options are joint tenancy with right of survivorship, where each owner holds an equal share and the survivor automatically inherits the other’s share, and tenancy in common, where owners can hold unequal shares and each share passes through the owner’s estate. Tenancy in common can suit couples who contribute very different amounts toward the purchase. The available options and their exact rules vary by state, so confirm them with a real estate attorney or your title company.
Should couples put a home repayment agreement in writing?
Yes. If one partner is covering the down payment or most of the costs and expects to be repaid, a written agreement spells out how much was contributed, the repayment schedule, each person’s ownership share, and what happens if you separate or sell. Putting it on paper turns a vague promise into a shared plan and reduces the risk of the resentment the article describes. Many couples have an attorney draft or review a property or cohabitation agreement.
What happens to a jointly bought house if an unmarried couple breaks up?
Unmarried partners generally do not have the property-division protections that divorce law gives married couples, so the outcome depends mainly on how the title is held and any written agreement. Common paths are one partner buying out the other, selling and splitting the proceeds, or, if the owners cannot agree, asking a court to order a partition. Deciding these terms before you buy is far easier than negotiating them during a breakup.
About the author
Contributing Writer, Wealthtender
Ben Le Fort is a personal finance writer and creator of the online publication “Making of a Millionaire.” He has been passionate about personal finance ever since graduating University with $50,000+ in debt.
In the eight years following graduation, he paid off all of the debt and built a seven-figure net worth. Ben holds a Bachelor’s degree in economics from Acadia University and a Master’s degree in Economics & Finance from The University of Guelph.
Ben lives in Waterloo, Ontario, with his wife, son, and cat named Trixie.