Many Seattleites are getting creative about how to buy a home. Especially with Millennials who may not have a partner or aren’t interested in getting married, buying a home with a BFF or other individual can help you qualify for a larger loan together. Buying a home with your bestie is also one way to get your foot in the door of home ownership!
Buying a home with someone else has many nuances, but with the right guidance, it’s not too complicated to navigate. If you’re thinking about heading down this path, here are a few things you need to consider:
What Are Some Examples of Buying a Home With Your Bestie?
There are a lot of scenarios for owning a home with a friend. Here are just a few examples:
- Buy a duplex together. Each of you owns one side so you have your own separate living spaces. This also makes dividing up ownership and the mortgage easier.
- Buy a triplex or quadplex together. Each of you can live in a unit and rent out the other units.
- Buy a triplex or quadplex with more people. You’re not limited to buying a home with just one other person; you can buy a triplex with 3 people, or a quadplex with 4 people, for example.
- Buy a single-family home together. This is harder to divide up, but it’s still possible. Sometimes a layout can be easy to co-exist without feeling like you are roommates.
What Do the Recent Fannie Mae Loan Program Updates Mean For Duplex/Triplex/Quadplex Properties?
In the last year, Fannie Mae updated their loan programs for duplex/triplex/quadplex properties. Essentially, they just increased the loan limit. This means you can qualify for a larger loan on these types of properties. And because home prices in Seattle are higher than many other cities, this update makes getting a loan for a duplex/triplex/quadplex more accessible. Before this update, you’d have to put such a large percentage down to reach the loan caps. However, you still need to make about a 25% down payment on a multi-family home. It’s not going to be a 5% down situation, so you will need to save up more.
If you’re buying a duplex with someone else, you would need to qualify together to purchase the duplex. Then you can divide the duplex as you please. Some properties will be easier to divide 50/50 than others; sometimes, one side of a duplex is bigger than the other, has different amenities, etc. After you figure out this aspect, you can decide how you’re going to split up your mortgage payment. Think one person gets the parking spot and the other person gets the upstairs unit etc. Have fun with it!
How Is Buying a Duplex Different From Buying Connected Townhomes?
Townhomes are separate properties, even when they are attached to other townhomes. Whereas a duplex/triplex/quadplex is considered one single property.
Can You Buy a Single-Family Home with Your Friend?
Yes! A property does not have to be categorized as a duplex/etc. to purchase with another person. The duplex situation is just interesting since you get separate living environments.
What Are Some of the Downsides of Buying a Home with Your Bestie?
Anytime you’re getting financially involved with someone else, complications can arise. Financial conflicts can definitely impact friendships, and it’s crucial to have an open conversation upfront about the details of your arrangement. When you buy a home with your friend, technically you don’t need a contract about who owns what. But it’s VERY wise to have a contract in place. Even if everything goes smoothly, there are a few scenarios you’ll want to think about:
- What if one of you loses your job and can’t contribute to the mortgage anymore?
- What if one of you passes away?
- What if one of you needs to move?
- What if one of you wants to sell your portion?
- What if one of you starts dating someone and they want to move in?
These are just examples of situations you should consider.
Also, when you embark on co-ownership, you could be taking on liability for the other person’s debts. It’s important to go into this scenario with all of the facts, as it’s not without risk by any means.
On that note…
What If One of You Wants to Sell Your Portion of the Home?
If one of you wants to sell your part of the home but the other person doesn’t, reach out to us. There’s definitely ways to navigate this situation. The person who is selling will need a way to determine the value of their portion of the home, have an appraisal done, etc. Basically, you’ll want to talk to us to make a plan.
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All of this depends on your circumstances and your long-term goals. If you’d like to weigh your options, reach out—we’re happy to talk things through with you.
One of our listings is this single-family home in Judkins Park that lives like a duplex! Get all of the details here.