Buying a Home as a Couple
One of the biggest decisions that come with applying for a home loan is whether or not to make the purchase with your spouse or partner.
For some couples, this is a no-brainer. They need the income of both partners to pay for the loan, and they’re a team in everything they do. Their finances may already be completely joined, and even if they’re not, they just know that buying a home together is the right decision for them. For other couples, it’s just as clear that the loan will be in one name only. This could be due to any number of factors in the relationship or simply because one party has a credit history that they don’t want included when they are considered for the loan.
If you’re still not sure whether or not you want to include your spouse or significant other on the mortgage and/or property deed, these facts may help you make a decision.
Going It Alone
Buying a home in only one name makes sense if one party has a credit history that will not help get approved for the loan. On the other hand, if you purchase the home in one name only, the only income that will be considered as a means to repay the loan is the income of the person who will be signing the mortgage. That may not be enough to qualify for the loan, in which case you’ll need both names on the paperwork.
In some states, married couples cannot purchase a home without both spouses being involved. In fact, this may hold true even if the couple is separated, because some states do not recognize a legal separation.
“Unmarried co-owners have to choose whether to be tenants in common or join tenants with right of survivorship. Married co-owners could choose either of those forms, or in some states might opt to be tenants by the entirety or in others to hold their home as community property.” - American Bar Association
If you’re married and are considering buying a primary residence with your spouse, it’s in both parties’ best interests to contact a lawyer. Depending upon the state you’re in, it could get complicated.
Purchasing an investment property is different, though, and can usually be done in one name only. However, laws do vary by state, so make sure you do your research.
Non-married couples can still buy a home together. Again, it’s a good idea to meet with a lawyer and form a contract in order to prevent potential problems in the future. While doing so might seem less-than-romantic, it’s a significant step to take, and can save thousands of dollars (and lots of heartbreak) down the line should the relationship go downhill.
To sum it all up, you’ll likely want to purchase a home together if you need both incomes and neither credit history is negative – and you’ll want to keep your spouse (or partner) off the paperwork if the income is not needed and/or he or she has a credit history that would keep you from qualifying for a loan.