With home prices rising and affordability becoming more of a challenge, some buyers are exploring creative ways to get into the market. One option that’s gaining attention is co-buying a home with friends.
It sounds simple enough. Pool your money, split the mortgage, and become homeowners together. But like any financial decision, it comes with pros, cons, and a few things you really need to think through before jumping in.
For many people, especially first-time buyers, the idea of buying with friends is about affordability.
It can be a way to:
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Get into a better neighborhood
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Afford a larger property
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Share costs like the down payment, monthly mortgage, taxes, utilities, and repairs
In some cases, it can also be about lifestyle. Maybe you already live with a roommate you trust, or you’re in a phase of life where community living just makes sense. Instead of renting, why not build equity?
Let’s look at the potential benefits, the risks, and how to make it work if you’re considering this path.
What can go right
If you and your friend are financially stable, communicate well, and share similar goals, co-buying can be a smart move. You can build equity faster, qualify for a better mortgage, and enjoy the benefits of homeownership together.
You might also be able to buy sooner than you would on your own. Instead of waiting to save for a full down payment, you split the cost and move forward while prices are still within reach.
What to consider carefully
The biggest mistake people make is assuming everything will go smoothly just because they’re close. But owning a home is a long-term responsibility, things change and more importantly, ways of living are not always the same.
Here are a few questions to ask:
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What happens if one person wants to move out in a year?
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How will decisions about repairs, renovations, or refinancing be made?
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What if someone loses their job and can’t contribute financially?
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Who gets what if the home is sold or someone wants to buy the other person out?
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Do your lifestyles complement each other? What are both of your habits in regard to cleaning, eating and sleeping?
It’s also important to look at the legal side. When you buy with a friend, you need a written agreement that outlines who owns what, who pays what, and what happens if things don’t go according to plan.
Loan details matter too
If you apply for a mortgage together, you’re both responsible for the entire loan. That means if one person can’t pay, the other is still on the hook. Late payments affect both credit scores. Your lender will also consider both credit histories, income, and debt when qualifying the loan.
That’s why it’s so important to have honest conversations up front about finances, credit, and long-term goals.
There are also different ways to structure ownership
In most cases, you’ll choose between joint tenancy or tenants in common. These determine what happens if one of you passes away or wants to sell their share. The right choice depends on your relationship and what each of you wants to protect legally. Sometimes it's tempting to forget about the paperwork because of the trust you have in a friend, but it is better to have it and not need it, than the other way around.
And it’s not about distrust, it’s about being prepared and respectful of each other’s investment.
So, is it risky or smart?
The answer is: it depends on the people involved. I know, not clear at all, but when there’s people involved, it's not possible to give just one answer. For the right pair or group, buying a home together can be a smart way to build wealth, share responsibility, and make homeownership possible sooner. And it’s not something to rush into without a plan.
Kelli Eggen
