There are a whole bunch of ways you could end up contributing to a mortgage beyond the traditional route of joint homeownership with a spouse. Maybe your partner took care of the down payment, but you’re splitting the monthly mortgage payments. Maybe they’re already partway through paying off a property, but you’ve been living there and paying “rent” (i.e., part of the debt) for the last few years. Whatever the situation, figuring out who owns how much of a property when formal agreements likely never took place can be a minefield. So we’re going to try and help navigate it alongside mortgage loan officer Rick Sidley, of Cornerstone Mortgage Group.
Is it cool to make payments on a home together even if only one person is on the mortgage?
Oh sure. It’s just up to the couple to work out for themselves how the mortgage gets paid. Maybe you split the costs evenly among yourselves? Maybe one can handle the down payment while the other is more suited to help with the monthly payments? That’s all up to you.
If we’re not married, would we want to put both names on the mortgage?
That’s also up to you — the question you really need to answer, though, is should you?
It all depends on what kind of credit you and your significant other have. If yours is great but the credit agencies file your partner under “Deadbeat,” apply for the loan yourself and keep your S.O. the hell out of this, unless you both eagerly await the opportunity to pay a higher interest rate.
“[The rate you qualify for] is going to go off the lowest person’s score,” Sidley says. “It’s basically the lowest common denominator. After all, it’s my money and it’s my rules, right?” he explains with a laugh. Then you can just work out whatever arrangement works to handle the down payment and monthly payments.
Still, whoever’s on the mortgage technically “owns” the house, right?
Well, not really — when you say “own,” that means the title. “They’re linked, but they’re mutually exclusive,” Sidley says. “More than one person can own a home, even if only one person is on a mortgage.”
I don’t follow.
Think of it like this: If two (or more) people are on the title, they equally (or however you want to work out the percentages) own the house, and benefit from equity gains if it sells. For a couple with uneven credit scores, this might be the ideal scenario: You both own the house, and you take advantage of the best possible mortgage terms.
That sounds good, but what if the relationship goes bad?
There are some serious ramifications in that case. Let’s say only your name is on the mortgage, but both your names are on the title. If your partner decides to leave, it’s all on you to make the payments and avoid default, but your former partner still owns half the home! No matter what you do with it in the meantime — say, refinance it — you need their permission. If you decide to sell it, of course you need their permission. And remember that your S.O. is entitled to half the equity you gain from the sale, even if you were making all the payments in the meantime. Meanwhile, if you default on the mortgage, that’s not really your S.O.’s problem (more on that in a bit).
So if my partner’s name is only on the title, are they liable for anything at all?
Sure — there’s property taxes and insurance, the title holders’ names are on those.
I guess I’m also asking if something bad happens — say, I default on the mortgage — does it affect my former S.O. if all they have is their name on the title?
It could, down the road. If they apply for a loan in the future, loan officers like Sidley will run reports on every property a person has ever owned. If it comes up that they once owned a home that went into default, your former partner will have some explaining to do — however, it won’t show up on their credit report, and it won’t arbitrarily affect their ability to qualify. But there will no doubt be questions asked.
If we’re unmarried and both our names are on the mortgage and we split up, what happens?
Well, you’re still both responsible for the loan, so you’ll have to work it out. Assuming you don’t want to continue “sharing” the home financially, someone will probably want to square any debts: If your S.O. contributed to the down payment, maybe they’ll want that back. But as far as taking one person’s name off of the loan itself, an adjustment of this magnitude — where the very identity of the borrower is modified — requires a refinance. Here’s what that entails.
What if we get married, or I just want to add my S.O.’s name to the mortgage?
Marriage doesn’t necessarily change anything. Adding someone’s name to the mortgage is pretty rare, Sidley says, but it’s not unheard of — maybe you want to help build their credit, which is very noble of you. But again, since you’re changing the actual borrower of the loan, this too would require a refinance.
What about if I move in with someone who’s already got a mortgage and I contribute to payments every month? If we split after a few years, am I entitled to any of the property’s value?
If you’re helping with payments and your name isn’t on the mortgage or title, well, it’ll suck to be you after the relationship ends — you’re entitled to the square root of jack shit. You’ll basically just have been paying rent.
Look, home ownership isn’t easy. Many of the homes for sale suck, prices are insane and everyone knows moving is a pain in the ass. So try not to fumble the actual ownership part of it all, okay?
Adam Elder
Adam Elder is a writer in San Diego. He's also written for Esquire and WIRED magazines, VICE, The New York Times, The Wall Street Journal, The Guardian, newyorker.com and elsewhere.
