Co-buying: Should You Consider Buying a Home with a Friend?

Co-buying: Should You Consider Buying a Home with a Friend?

Written by Zoocasa
Fact-checked by Caitlin Wood
Last Updated July 20, 2020

By: Zoocasa

If you’ve been looking at MLS listings in Toronto or other cities like Vancouver, you’ll have noticed that home sale prices have been increasing, making it harder to buy a home on a single income. However, that might not mean that your dream of homeownership is over. People are exploring other avenues to homeownership and some have begun buying with friends. Buying with a friend or “co-buying” creates an opportunity for people to achieve their dream of owning their own home without having to sacrifice their lifestyle.

Here are a few things you should consider if you are thinking about buying a home with a friend.

Creating A Contract

When looking at co-buying with a friend, one of the most important elements to have on hand is an extensive contract. A key step in creating a co-buying contract is to prepare for the worst while hoping for the best. Make sure that you think about what would happen to the property in the event of a death, someone moving out or even the friendship ending.

Although the contract does not have to be drawn up by a lawyer, it may be most beneficial to both parties if it is. Having a lawyer help you create your contract will ensure that it is legally binding which may come in handy if any previously unforeseen issues or circumstances were to arise. As well, a lawyer can help to clarify which kind of purchasing agreement best fits your needs. While having a Tenants in Common agreement may work well for co-buyers who may not own the same amount of stake in the home as this information would be laid out in the agreement, the creation of an LLC may be more beneficial for people who are looking to rent out their property as it also limits liability. 

Understanding the Financial Commitment

When looking at co-buying from a financial perspective, buying with a friend will allow you to qualify for a larger mortgage as well as creating an opportunity for you to pool together more money for a down payment. From a logistical standpoint, there are certain lenders who have mortgages that accommodate co-buyers. However, this is dependent on the size of your group as you may run into a bit more difficult finding a mortgage that accommodates you if you are part of a group of five or more. As well, while it may be uncomfortable, one of the most important steps you and your friend must take in this process is understanding each other’s financial positions including income and credit reports as well as understanding each other’s financial habits.

Decisions, Decisions

Although it may not seem like it is that big a deal, a large amount of consideration should be given to the decision-making process. A crucial thing to consider before starting the process is whether your ideal home is the same. It may cause problems if you are looking at condos for sale in downtown Toronto while your friend is envisioning a more suburban setting. However, decision making does not stop once the purchase has been made. It is important to think about how you will make home décor choices, how you would like to split up the space you have and how you will handle day to day things like maintenance. It may also be worth considering whether decision-making power should be divided based on the percentage of ownership if one of the buyers owns a greater stake in the property than others.

Most importantly you and your friends need to be on the same page when it comes to your future home. Doing a lot of the groundwork ahead of time will allow you to avoid a lot of issues down the road and create a smoother co-buying process. The co-buying experience is often truly whatever you make of it. 

Zoocasa is a full-service brokerage that offers advanced online search tools to empower Canadians with the data and expertise they need to make more successful real estate decisions. View real estate listings at or download our free iOS app.

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