7 Financial Moves When Buying a House as a Married Couple

Chris Porteous

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Updated: 2 Sep, 2024

Table of Contents

Align your homeownership goals through an honest conversation to establish middle ground and prevent mismatched expectations.
Set a realistic budget together, use the 28 percent housing rule, and review credit reports so you can plan confidently without overextending yourselves.
Create a breakup contingency plan for shared assets to keep expectations clear and protect your partnership, whatever the future may hold.

As of 2023, married couples had the highest share of home buyers across all age groups in the United States. Ages 25 to 33 were 54 percent, while ages 34 to 43 were 66 percent.

Meanwhile, unmarried couples had a 19 percent share of home buyers aged 25 to 33. But they are notably a sizeable share of the first-time home buyer market.

As first-time home buyers, married and unmarried couples have more buying power than single buyers. However, unmarried couples are more likely to make financial sacrifices for homeownership than married couples.

Although there are significant differences in purchasing decisions for couples, they may consider similar things before buying a house as a married couple. If you and your partner are planning to enter homeownership, here are the most essential financial moves to take before confirming your purchase and signing agreements:

1. Determine the reasons for buying a house

There are many reasons to buy a home, but the process can impact how aligned you and your partner are on priorities and expected outcomes. For instance, if you’re seeking to flip houses for a profit but your partner is looking for a forever home, you might turn an exciting time into a conflicting and contentious one.

For this reason, having an honest conversation with your partner about your homeownership objectives is essential. Think about your short-term aspirations and long-term plans. Is it better to hold onto a property briefly, own a home without living in it, or rent for now?

Whatever your goals, it’s better not to rely on feelings of “it’s what you’re supposed to do.” Before making any moves, get a gist of why you’re both interested in entering homeownership to establish a middle ground.

2. Assess your financial resources

Couple moving to new home

You must agree on a budget. Determining your price ceiling is crucial because otherwise, you might end up with an unaffordable property.

If you and your partner have incomes, you may have the flexibility to make home payments. However, if only one of you works, you may not have sufficient backup to cover the potential costs of homeownership.

You must also consider other financial commitments, such as savings, investments, and emergency funds, to ensure that homeownership won’t strain your finances or compromise your ability to meet your financial goals.

As such, you must calculate how much you can afford by multiplying your monthly gross income by 0.28 (28 percent). Generally, you should spend no more than this percentage on housing to ensure you have money for other necessary expenses.

You can do a more comprehensive calculation with an online mortgage calculator, which will help determine how much you can afford. The calculation will also show how much you’ll spend based on down payment size, interest rate, and other outstanding debts.

3. Review your credit reports

Request your and your partner’s credit reports and thoroughly review them for errors. The last thing you want to experience is finding a dream home and getting held up or denied for a mortgage because of erroneous records.

Fortunately, you can fix them, but not overnight. If you find errors, gather the necessary documents and create a letter disputing the error. Afterward, submit these files to the credit reporting bureau whose report you are disputing or the company that recorded the incorrect information.

Credit report reviews will also help you gauge your financial standing. If you have poor credit scores, the reports can provide the areas where you need to improve your spending habits and repayments.

4. Identify your preferences in a property

Homeownership is a mutual commitment for couples. You must ensure you can commit to the responsibility by identifying your property preferences. What does your dream home look like? Where should it be located?

Also, you must account for what your future selves might want. If you plan to have children, research a location with school districts and child-friendly neighborhoods. If you plan to use the property as an extra income source, research an area popular with renters and tenants.

Other questions that can provide guidance include:

How much space do you need?
Do you prefer a quiet street or the hustle and bustle?
Do you prioritize a home with resale potential or proximity to your workplace?

5. Decide how much work you’re willing to put in

Fixer-uppers can be tempting. They have lower prices because they’re not ready for move-in, and DIY-ing some renovations can be worthwhile. However, these types of properties require extensive work.

So, before investing in a fixer-upper, consider how much time you and your partner will devote to the renovation. You must ensure that you both want the same thing.

Nonetheless, fixer-uppers can be a good investment because they can help you build home equity while establishing a home you love.

If you agree to purchase a move-in-ready property, it still entails ongoing maintenance and potential repairs. You should also discuss whether you’ll do the chores or hire some people.

6. Create a breakup contingency plan

Thinking of the breakup is a downer. However, although your love might currently feel unshakable, it’s also crucial in financial planning because you won’t know how everything will turn on in the future. Unprecedented forces may come in and act in surprising ways.

And because no one is guaranteed to be together forever, you and your partner should create a contingency plan for dealing with shared assets. Talking about this situation helps ensure clear expectations should the worst happen.

Married couple moving home

7. Explore home-buying financing options

Here are the financing options you can consider when buying a house as a married couple:

FHA loans

FHA home loans are provided by the FHA—Federal Housing Administration. Private lenders lend the money, and the FHA insures the loan.

These mortgages offer down payments as low as 3.5 percent and accept lower credit scores than most conventional loans. However, their maximum amount varies by county. They can be the cheapest option if you have a low credit score.

You and your partner can take out an FHA loan together or separately.

VA loans

VA loans are insured by the VA—Department of Veterans Affairs—for veterans, service members, and their families.

If you’re a spouse of an active service member, you can take out a VA loan. If unmarried, your veteran or servicemember partner can add you as a co-borrower.

VA loans have zero down payment—as long as the home price doesn’t exceed the appraisal value. There’s also no private mortgage insurance (PMI) requirement. The VA may even offer assistance if you’re facing temporary monetary setbacks.

However, interest rates may be higher, maximum loan amounts vary, and you may need to pay a one to three percent VA loan funding fee.

Conventional mortgages

Conventional mortgages are the most common type of home loan. Generally, you can qualify for these mortgages with a mid-600s credit score and a debt-to-income (DTI) ratio between 43 and 50 percent.

However, a less than 20 percent down payment involves paying for PMI. Fortunately, mortgage insurance rates are often lower in conventional mortgages than in most loans.

Still, conventional loans can be a good option if you want to receive lower interest rates with a larger down payment.

Grants

Grants for first-time home buyers can help finance your homeownership if you and your partner are low- or moderate-income earners. These cash rewards don’t have to be repaid.

First-time home buyer grants include:

Down payment assistance – This grant can range between $5,000 and $15,000. It also includes employer-assisted housing (EAH) programs for qualified employees.
Closing cost assistance – This grant may provide one lump sum for the down payment and closing, or it may only cover two to five percent of the closing fees, such as home appraisal, recording fees, and title insurance.

You can receive grants from the following entities:

Financial institutions, e.g., private lenders like banks and credit unions
Federal and state governments
Non-profit organizations

How different is home-buying for married and unmarried couples?

Whether married or not, many similarities and differences in homeownership may apply to your planning and purchasing processes.

Mortgage

Marital status doesn’t impact your ability to qualify for mortgages. Approval will depend on your credit, income, and assets. The only difference is the application: you can file individually or together.

As an individual applicant, you can qualify for a better mortgage rate if your credit score exceeds your partner’s. However, you won’t be able to pool your partner’s income, diminishing your purchasing power. You can’t use your partner’s income to offset your DTI ratio if you have debts.

You can receive better rates for joint applications if you meet the requirements and have similar credit scores. If your combined DTI ratio is lower than that of single applications, you can qualify for higher mortgages and afford more expensive properties.

However, combined financial debts or pitfalls can affect your joint application.

Ownership method

Regardless of the mortgage application, you and your partner can hold the title however you wish. One or both of you can be on the title.

The ownership methods are as follows:

Sole ownership – Only one person is on the title and retains the property rights. If your partner doesn’t want homeownership obligations, they can not be legally tied to the property. However, transferring the property can be challenging if the owner dies without a will.
Joint tenancy – Under this method, two or more people are on the title. All parties have equal rights and shares in the equity. However, all owners must approve before selling or refinancing the property.
Tenancy in common – Two or more individuals can vest financial interest in the property, but it doesn’t need to be equal. Each owner receives the title for a portion of the home. For example, you may own 60 percent while your partner owns 40 percent. However, all owners are liable for debts in the property.

Take your time

Homeownership responsibilities are a commitment regardless of marital status. This is why you must take these financial moves to assess the suitability of individual and joint ownership when buying a house as a married couple.

Remember to discuss all the available options and be open to each other so that you can make an informed, sensible decision for your current situation and future.

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Chris Porteous Blogger

Chris Porteous is the CEO of SearchEye, a company that offers a unique line of marketing services for clients and agencies across the globe. Prior to setting up his own company, he worked for prestigious financial institutions such as Goldman Sachs,... Read more UBS Securities and DBRS. He regularly shares his insights on business and finance on Entrepreneur, Forbes, Due and many other reputable websites. Read less