Buying Your First Home Alone vs With a Partner: What Changes?
Buying a house alone vs with a partner has its challenges: you’re responsible for all the costs, decision-making, and responsibilities. But it has advantages as well, including some that you may not even have thought of.
Our experienced real estate agents have worked with hundreds of couples, single individuals, and co-buyers through questions, problems, and solutions. Here’s what they’ve said about buying a house alone vs with a partner.
What Changes When Buying a House Alone?
Here’s how buying a house on your own differs from buying with someone else, whether that’s a partner, a family member, or a friend:
Qualifying for a Mortgage
The most significant practical difference between buying a house alone vs with a partner is mortgage qualification. When two people apply for financing together, lenders look at their combined income, which generally allows them to qualify for a larger loan.
That said, a partner also brings their own debt and credit history into the process. If they have significant debt obligations, an inconsistent employment history, or something in their past that increases risk for the lender, these will be taken into consideration. These factors could have a negative impact on your ability to get the size loan you want or the interest rate you could qualify for on your own.
As a sole buyer, your main question isn’t “can I buy a house alone,” but “will I qualify for the mortgage I want, given my own income, credit score, and debt load?” Consulting with a mortgage broker or financial planner is a good option if you’re unsure. They can run your numbers and give you a realistic picture of what size loan you could qualify for.
The Size of Your Down Payment
With a partner, two people are saving toward the same goal. You’ll have a larger combined income to work with and lower costs while you’re renting. It can help to have a partner to keep you accountable as you save on costs and put more money aside.
On the other hand, there’s no reason why you can’t save for a down payment on your own, even if that takes a bit longer. Using hacks like forced savings that are deducted from your pay before it goes into your bank account can be remarkably helpful, and there’s nothing quite like working toward a goal that you set for yourself.
Deciding on a Property
Buying with a partner often means compromising on what type of property you’ll buy. Do you prioritize affordability or lifestyle factors? Do you want a garage big enough for both cars, or can one of you park on the street (and if so, which one)? Whose workplace should you be closer to? Whose family will you be living near, and whose will be a few hours away?
If you’re buying a house alone, these decisions are entirely yours. You don’t have to give up your dreams of a customized workout space or home down the street from your mom’s place. Once you move in, all the décor and renovation decisions are also up to you. Your timeline is also your own: you decide when it’s right for you to buy and when to wait for your finances or the market to improve.
Ownership Structure
If you buy with a partner and you’re not legally married, decisions need to be made about how the title for the property will be held: as a joint tenancy (50/50 ownership), or tenants in common (proportional ownership, such as 70/30 or 60/40).3 Joint tenancy includes right of survivorship (The property transfers automatically to the surviving partner if one of them dies), whereas tenants in common does not (the deceased partner’s share of the property transfers to their estate).
If you’re buying on your own, you don’t need to make this decision, although it’s wise to have a will in place so your property is handled according to your instructions if you pass away. If you start a relationship later and your partner moves in with you, you’ll need to have a discussion about ownership structure and survivorship. Consult with a real estate lawyer to be sure you’re protected.
First-Home Buying Considerations
For first-time home buyers, there are several programs that can help you get into a home faster. These programs are available to solo buyers and couples alike.
- A First Home Savings Account (FHSA) allows you to put up to $8,000 per year into tax-deductible, tax-sheltered savings, up to a lifetime maximum of $40,000.1 You can also use a regular tax-free savings account (TFSA) to help you save.
- The Home Buyers’ Plan lets you withdraw up to $35,000 from your RRSP for a down payment.1
- The First-Time Home Buyer’s Rebate (FTHB GST/HST) can save you 100% of the GST (or federal portion of HST) on a new build or a home that has been substantially renovated.2
Incentives for first-time buyers change frequently, and you may find programs specific to your province or municipality as well. Keep an eye on the latest to make sure you get all the benefits you’re entitled to.
How to Buy a House on Your Own
Is it possible to buy a house alone? Absolutely. You may need to buy something smaller in a more affordable area than if you buy with a partner, but that shouldn’t stop you; a well-chosen starter home gets you on the first rung of the property ladder so you can start building equity.
Getting started with the buying process is straightforward: book an appointment with a financial planner or a mortgage lender to scrutinize the numbers and make sure you’re on track. Get preapproved for a loan so you know what your budget is. Then make an appointment with a real estate agent who understands your goals and can show you homes in your price range that have the features and amenities that are perfect for you as a single buyer.
References
- https://www.canada.ca/en/financial-consumer-agency/services/buying-home.html
- https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-hst-rebates/first-time-home-buyers-gst-hst-rebate/what-rebate.html
- https://www.realtor.ca/blog/how-you-own-a-home-matters-joint-tenancy-and-tenants-in-common-explained/40847/1361
