For most co-buyers, money is the reason to team up. In the Neighbors Bank Co-Buying Report, 52% of people who’d consider co-buying said they wanted to split the monthly payment, and 37% wanted to split the down payment.

The good news: buying together doesn’t limit your loan options. Lenders work with multiple borrowers all the time. But the way a lender looks at two or three buyers is different from how it looks at one, and the type of loan you choose can change what’s possible.

This is post two of our eight-part series on buying a home with friends or family. Here’s what to know about financing before you apply.

A quick note before we dive in: This post is meant as general guidance to help you know what questions to ask. Loan programs change, every lender has its own rules, and every group of co-buyers is different. Before you make any decisions, talk with a qualified mortgage lender and have them confirm how these details apply to you.

How lenders look at co-borrowers

When you apply together, the lender reviews everyone on the loan as a team. That cuts both ways.

Income adds up, and so do debts. Your combined income can help you qualify for more home. But every borrower’s car payment, student loans, and credit card balances count too. One person’s high debt load can pull down the whole application.

The lowest credit score often sets the price. On a conventional loan, Fannie Mae takes each borrower’s middle score, then uses the lowest of those scores to price the loan. If one co-buyer has a 780 and another has a 640, your rate will likely be based on the 640. Sometimes it makes sense to leave someone off the loan. A qualified lender can run it both ways and show you the difference.

Everyone is on the hook for the whole loan. This is the part people miss. If you sign the mortgage, you’re responsible for the entire payment, not just your share. If a co-owner stops paying, the lender can come to you for all of it, and late payments show up on everyone’s credit.

There may be a limit on how many borrowers. Most lenders are comfortable with two to four borrowers on one loan, but policies vary. If you’re buying with a larger group, ask early.

Loan options for co-buyers

The right loan depends on who you’re buying with and whether everyone will live in the home. Relatives often have more options than friends.

Loan type	Who can co-borrow	Does everyone have to live there?	Good to know
Conventional	Family or non-family	No, non-occupant co-borrowers are allowed	The most flexible option for friends buying together. A non-occupant co-borrower may mean a larger down payment.
FHA	Family or non-family	No, but it matters who doesn’t	With an unrelated co-borrower who won’t live there, the loan is generally capped at 75% of the home’s value. A family member who won’t live there can still qualify for the low-down-payment option.
VA	A veteran plus a spouse, another veteran, or a non-veteran	The veteran must live there	With a non-spouse, non-veteran co-borrower, the VA guaranty covers only the veteran’s share, so a down payment is often needed. VA prior approval is required, and not every lender offers these loans.
USDA	Borrowers who will live in the home	Yes	Zero down in eligible rural areas, but the income of every adult in the household counts toward the program’s income limit. Co-signers aren’t allowed.

That FHA difference is a big one for families. A parent helping an adult child buy, for example, may be able to join the loan without living in the home and still keep the down payment low. Two friends in the same spot would likely need a much larger down payment, or a conventional loan instead. Use this table as a starting point, then have your lender confirm which programs you actually qualify for.

Down payments, gift funds, and unequal shares

Gift funds can help. Many loan programs let a relative gift part of the down payment. FHA loans also accept gifts from an employer, a union, a charity, a government down payment program, or a close friend with a documented relationship. Gifts usually need a signed gift letter and a paper trail showing where the money came from, so talk to your lender before anyone moves money.

A gift is not the same as a loan. If a parent is “gifting” money but expects to be paid back, that’s a loan. The lender has to count it. Be upfront about it.

Unequal contributions are common and fine. Maybe one person puts down $40,000 and the other puts down $10,000. That’s workable, but the lender doesn’t track who paid what. Your mortgage won’t reflect it, and depending on how you take title, your deed may not either. That’s why you’ll want it spelled out in a written co-ownership agreement. We’ll cover title and agreements in post four.

Keep a cushion. Lenders want to see reserves after closing, and so should you. Agree on how much each person will keep available for repairs and surprises before you spend it all on the down payment.

How to get pre-approved together

1. Have the money talk first. Share credit scores, income, debts, and savings with each other before you share them with a lender. No surprises.
2. Pull your credit early. If someone’s score needs work, a few months of paying down balances can make a real difference in your rate.
3. Talk to a qualified lender early, before you start touring homes. Look for one who works with co-buyers often. Ask how they handle multiple borrowers, non-occupant co-borrowers, and gift funds, and have them verify the details in this post for your situation. We’re happy to connect you with local lenders we trust.
4. Ask the lender to run more than one scenario. Compare everyone on the loan versus only some of you. Compare loan types, too. The best fit isn’t always obvious.
5. Gather documents for everyone. Each borrower will need pay stubs, W-2s or tax returns, bank statements, and ID. Gift letters, if any, come next.
6. Agree on a budget you’re all comfortable with. Being approved for a price doesn’t mean everyone should stretch to it. Settle on a monthly payment that works for the person with the tightest budget.

Up next

Once you know what you can afford together, the fun part starts: the home search. In post three, we’ll talk about setting expectations before you tour, including must-haves, deal-breakers, and the kinds of homes that work well for two households.

Missed the first post? Start with Is co-buying right for you?

Thinking about buying with a friend or family member? The Blom Team can help you sort through your options and connect you with lenders who work with co-buyers. Reach out anytime.

This post is for general information only and isn’t legal, tax, or financial advice. Loan guidelines change and vary by lender, so talk with a qualified lender about your situation.