Buying a home with a friend can seem like a smart way to break into Canada’s housing market. With rising property prices in cities like Toronto and Vancouver, co-ownership may feel like the only path toward homeownership for many young Canadians. But as practical as it may sound, entering a joint mortgage with a friend comes with financial, legal, and emotional risks that should not be underestimated.

This blog walks you through the key considerations, pitfalls, and planning strategies to help you make a wise, informed decision when purchasing a property with a friend in Canada.

Why Consider Buying Property with a Friend?

• Affordability: Sharing the down payment, mortgage payments, and property taxes makes homeownership more attainable.
• Shared Responsibilities: Maintenance, utility costs, and daily upkeep can be divided between co-owners.
• Access to Larger Homes: Joint buying power might allow you to afford a larger or better-located home than you could on your own.
• Investment Opportunity: Some friends team up to buy investment properties, such as duplexes or condos, and split rental income.

But shared ownership isn’t just about shared benefits — it’s also about shared risks. Let’s break those down.

Pitfalls of Joint Mortgages with Friends

• Unequal Contributions or Expectations

It’s common for one party to contribute more toward the down payment or monthly expenses. Without a written agreement, these differences can lead to resentment or disputes, especially if the home is later sold.

Planning Tip: Draft a co-ownership agreement outlining each party’s contribution, share of ownership, and how profits or losses will be divided.

• Credit Score Disparities

When applying for a joint mortgage, both applicants’ credit scores will be considered. If your friend has a poor credit history, it could result in:

• Higher interest rates
• Denial of mortgage approval
• Strained financial responsibility on the stronger borrower

Planning Tip: Get pre-approved together to understand how your combined financial profiles affect your borrowing power. Consider whether your friend’s financial situation could pose a long-term burden.

• Missed Payments Affect Both Parties

With joint mortgages, both parties are equally responsible for the full mortgage amount. If your friend misses a payment, your credit score may also suffer — even if you paid your portion on time.

Planning Tip: Set up a joint account exclusively for mortgage payments and have both parties contribute regularly. Automate payments to reduce the chance of default.

• Complications Upon Selling or Exiting

Life circumstances change. One party may want to sell, move in with a partner, or back out of the agreement. Without a clear exit strategy, this can lead to legal battles.

Planning Tip: Your co-ownership agreement should include:

• The process for selling the home
• Buy-out options
• How the home will be valued
• Timeframes for exiting the agreement

• Unexpected Life Events

Injury, job loss, relationship changes, or even death can affect one party’s ability to uphold their share of the mortgage or ownership responsibilities.

Planning Tip: Consider life and disability insurance policies that name each co-owner as a beneficiary. This can provide financial protection if the unexpected happens.

Legal Structures for Co-Ownership in Canada

When buying with a friend, you’ll need to choose between:

Joint Tenancy

• Equal ownership
• Right of survivorship (if one owner dies, the other gets full ownership)
• Common for spouses or family members

Tenants in Common

• Flexible ownership shares (e.g., 70/30 or 50/50)
• No right of survivorship — each party can will their share to someone else
• Recommended for friends or business partners

Planning Tip: Most non-family co-buyers in Canada opt for “tenants in common” with a clearly defined percentage of ownership on the property title.

Other Considerations

Down Payment and Tax Credits

Both parties can combine funds for the down payment. First-time homebuyers may qualify for programs such as:

• Home Buyers’ Plan (HBP) — Withdraw up to $60,000 from your RRSPs (combined) to buy a first home
• First-Time Home Buyers’ Tax Credit
• Land Transfer Tax Rebates in certain provinces

Be aware that these benefits often require both buyers to qualify as first-time buyers.

Mortgage Insurance

If your combined down payment is less than 20%, you’ll need mortgage loan insurance through CMHC or other providers. Premiums are based on the total loan, not individual shares, so all co-owners are equally responsible for insurance costs.

Property Insurance and Utilities

Decide early how you’ll handle property insurance, utilities, internet, and other shared services. Make sure both names are listed on the accounts or agreement documents.

Steps to Protect Yourself

1. Consult a Real Estate Lawyer: Before signing anything, get independent legal advice to ensure your interests are protected.
2. Get Pre-Approved Together: Understand your combined borrowing power and any red flags.
3. Draft a Legally Binding Co-Ownership Agreement: This is the most important step.
4. Create a Joint Bank Account: For transparency and accountability with shared expenses.
5. Establish a Conflict Resolution Plan: Mediation or arbitration clauses can prevent disputes from turning into lawsuits.

Buying a home with a friend can be a smart and rewarding way to enter the Canadian real estate market — but only if you plan wisely. Clear communication, legal protections, and financial transparency are key to avoiding the pitfalls of joint homeownership.

If you’re considering this route, don’t rush into it emotionally. Treat it like a business partnership and ensure everything is agreed upon in writing. A bit of planning now can save you from major headaches down the road.