Buying a home with a partner when one of you puts in more money
Two people buying a house together rarely put in exactly the same money. One sells a condo, the other has less saved, and the down payment ends up 75/25. Then the deed says joint tenants with right of survivorship, which means equal shares. If nobody writes down the difference, the person who paid more can lose it in a breakup, a sale, or a death.
What the deed decides for you
How the two of you hold title sets the default answer to "who gets what."
Joint tenancy with right of survivorship. Each owner holds an equal, undivided share. When one dies, the survivor takes the whole property automatically, outside the will. That is often what couples want for death, but it also means equal shares in a sale or a split, no matter who paid what.
Tenancy in common. The deed can state any percentages, such as 75 and 25. There is no survivorship, so each owner's share passes under their will or estate plan. Couples who choose this often pair it with wills or transfer on death deeds where available.
Married couples have a third layer: community property or marital property rules can override how the deed reads in a divorce. Our guide to notes in a divorce settlement covers that side. Unmarried couples have no divorce court. If they split and cannot agree, one of them may have to ask a court to order a partition, and outcomes on unequal contributions vary by state and by judge.
The note approach, with numbers
Say Alex and Jordan buy a $400,000 home. Alex puts in $60,000 and Jordan puts in $20,000, for an $80,000 down payment. They want equal ownership and survivorship, so they title it as joint tenants.
To make equal ownership fair, each should have put in $40,000. Jordan is $20,000 short. Jordan signs a promissory note to Alex for $20,000. Now each partner has $40,000 in, Jordan just owes $20,000 of it to Alex.
Five years later they sell for $450,000 and pay off $320,000 on the mortgage. That leaves $130,000 of equity, or $65,000 each. Jordan repays the $20,000 note out of their share.
| Alex | Jordan | |
|---|---|---|
| Cash put in | $60,000 | $20,000 |
| Half of equity at sale | $65,000 | $65,000 |
| Note repayment | +$20,000 | −$20,000 |
| Walks away with | $85,000 | $45,000 |
Each gained $25,000 over what they put in, because they owned equal shares of the $50,000 increase. Without the note, Alex would have walked away with $65,000 after putting in $60,000, and Jordan with $65,000 after putting in $20,000.
Compare tenancy in common at 75/25 with no note. Alex would get 75 percent of $130,000, or $97,500, and Jordan $32,500. Alex keeps a bigger share of the gain as well as the money put in. Neither method is wrong. They answer different questions: did the extra money buy a bigger share of the house, or was it a loan between equal owners?
Writing the note
A note between co-owners should state the amount, the interest rate if any, and when it comes due. Common choices are due on sale or refinance, due if the borrowing partner moves out or the couple separates, or a monthly payment plan. Add what happens if the borrowing partner dies. If the home is held with survivorship, the lender partner takes the whole house anyway, but with tenancy in common the note becomes a debt of the borrower's estate.
Interest can be zero, but loans over $10,000 can trigger the federal below-market loan rules. Our guide to imputed interest and the AFR explains the threshold and the rates.
Some couples also secure the note with a recorded lien against the borrowing partner's share. That gives the lender partner priority over the borrower's other creditors, but it is real estate paperwork, and a local attorney should prepare it. Our guide to secured vs unsecured notes covers the trade-offs.
Do not skip the co-ownership agreement
The note handles the money. A separate co-ownership agreement should handle the house: who pays the mortgage and repairs, what happens if one partner stops paying, how a buyout is priced, and how long the other partner gets to refinance. Sign both documents before closing, while everyone still agrees.