Buying a First Home Together in Colorado: Title, Loan, Split

Couples in Colorado combine assets to buy a first home because two incomes qualify for a larger loan, two savings accounts reach a Front Range down payment sooner, and one mortgage payment costs less than two rents. The purchase works when three documents are right before closing: the deed vesting (joint tenancy or tenancy in common), the loan application (whose credit and income the lender uses), and a written co-ownership agreement that states what happens on a split, a death or a missed payment.

This guide covers all three for married and unmarried co-buyers in the Denver metro, plus the Colorado rules that decide who owns what when the relationship changes. Read the first-time home buyer guide for Colorado alongside it.

Why two buyers reach a Colorado home faster

• Two incomes on one application. The lender adds both gross incomes and both debts. Two people earning $70,000 each qualify for roughly twice the loan one of them does alone at the same debt-to-income ratio.
• Two down payments. A 5 percent conventional down payment on a $550,000 Aurora or Thornton home is $27,500; split two ways it is $13,750 each plus closing costs of 2 to 3 percent.
• One housing payment. Two Denver apartments at $1,700 each cost $3,400 a month; one mortgage payment on the same $550,000 home, with taxes and insurance, replaces both.
• Two credit histories. A partner with thin credit rides on the other's file, within the lower-score rule below.

Whose credit does the lender use?

The lender pulls three bureau scores for each borrower, takes the middle score for each, and prices the loan on the lower of the two middle scores. A borrower at 760 paired with a borrower at 640 gets a 640 rate. Both incomes count and both debts count. That produces three choices before you apply:

1. Both on the loan. Maximum income, lowest score, both liable for 30 years.
2. One on the loan, both on the title. The stronger borrower qualifies alone on one income, and the deed still names both owners. The non-borrowing partner owns half the home and owes nothing on the note. Lenders allow this on conventional, FHA and VA loans.
3. Fix the low score first. A 60-to-180-day plan through Kenna Credit Care mortgage readiness lifts a 640 into the next tier before the application.

Gift funds from either partner's relatives are allowed with a signed gift letter and a documented transfer. On conventional loans a gift from a fiancé or domestic partner is allowed as well. Get an underwritten pre-approval with both of you on the file and one with the stronger borrower alone, and compare the two rates; the Colorado mortgage pre-approval guide lists the documents each of you brings. The Kenna Real Estate Group works with Mike Oswald, VP of Mortgage Lending at Rate, NMLS 261003, Equal Housing Lender. You are free to use any lender. Compare loan programs on the Colorado home financing guide.

Joint tenancy or tenancy in common?

At closing the title company asks how you want to hold title. Colorado law creates a tenancy in common unless the deed states that the grantees take as joint tenants, so the choice has to be made on purpose.

Tenants in common who want survivorship without equal shares record a Colorado beneficiary deed naming each other, which transfers the share at death outside probate and is revocable while both are alive. Ask a Colorado real estate attorney to draft it with the co-ownership agreement.

The co-ownership agreement

Married couples have the Colorado dissolution statute to divide a home. Unmarried co-buyers have nothing unless they write it. A co-ownership agreement is a private contract, drafted by a Colorado attorney for $500 to $1,500, that answers the questions the deed does not:

• Contributions. Who paid what at closing, and whether the shares on the deed track the money or stay equal.
• Monthly split. Mortgage, taxes, insurance, HOA dues, utilities and repairs, by percentage.
• Missed payments. What happens when one owner stops paying: a loan from the other, an ownership adjustment, or a forced buyout.
• Exit. Notice period, right of first refusal, how the price is set (one appraisal, or two with the average), and how long the buying owner has to refinance the leaving owner off the loan.
• Sale trigger. If neither buys the other out within 90 days, the home is listed and the proceeds split by the agreed shares.
• Occupancy. Who moves out during a split, and whether rent is owed to the owner who leaves.
• Death. Buyout terms for the survivor if the heirs of the deceased owner inherit a share.

Sign it before closing, not after. Once the deed records, neither owner has a reason to agree to anything.

Is Colorado a community property state?

No. Colorado is an equitable distribution state. In a divorce, the court divides marital property in the proportions it finds fair after weighing each spouse's contribution, the economic circumstances of each, and the value of the property set apart to each. Fair does not mean equal, and the home is not split 50/50 by rule.

Property acquired during the marriage is marital property regardless of whose name is on the deed. Property either spouse owned before the marriage is separate property, but the increase in its value during the marriage is marital. A partner who brings $60,000 of savings to a joint purchase two years before the wedding should document it in the co-ownership agreement and keep the paper trail, because after the marriage the growth in equity is shared even where the contribution is not. Anyone buying before a wedding should have a Colorado attorney review the agreement against a prenuptial agreement.

What happens on a split

Unmarried co-owners follow the co-ownership agreement. Without one, either owner has the right to file a partition action in district court, and the court orders the home sold and the proceeds divided, with each side's contributions argued out in front of a judge at a cost that exceeds the attorney's fee for the agreement many times over. The lender does not care who moved out; both borrowers stay on the note until it is refinanced or paid off, and a missed payment hits both credit files.

Married co-owners go through the dissolution process, where the home is valued, one spouse keeps it and refinances or the home is sold. The Kenna Real Estate Group runs a dedicated program for that sale through its divorce site, Divorce Workshops Colorado, and our post on real estate advisors for divorce in Colorado explains how the home is handled during the case.

Colorado recognizes common-law marriage. Unmarried partners who hold themselves out as married, share finances and file jointly risk a court finding them married, which pulls the home into the marital estate. State in the co-ownership agreement that the parties are not married and do not intend to be.

Do both of you need to be first-time buyers?

On most 3-percent-down conventional first-time programs, at least one borrower must be a first-time buyer, defined as no ownership interest in a principal residence in the last three years. A partner who owned a condo in Lakewood two years ago does not disqualify the purchase; the other partner carries the first-time status. Colorado Housing and Finance Authority (CHFA) programs and metroDPA use their own income limits and education requirements. See first time home buyer programs in Colorado for each program's rules.

Taxes for co-owners

• Mortgage interest and property tax. Married couples filing jointly deduct them on one return. Unmarried co-owners each deduct the share they paid, and each needs a paper trail of their payments.
• Capital gains on sale. The federal exclusion is $250,000 per owner or $500,000 for a married couple filing jointly, when the owner lived in the home two of the last five years. Two unmarried co-owners who each meet the test each exclude $250,000 on their share.
• Colorado income tax follows the federal figures, so the exclusion carries through to the state return.

The closing-day checklist for co-buyers

1. Both names on the contract, or one name plus "and/or assigns" struck out, so the deed matches the offer.
2. Vesting chosen in writing on the title company's form: joint tenancy or tenancy in common with shares.
3. Co-ownership agreement signed and a copy in each owner's file.
4. Gift letters and transfers completed before the appraisal is ordered.
5. Homeowner's insurance in both names.
6. Closing costs of 2 to 3 percent of price split as the agreement states; see closing costs for Colorado home buyers.

Where to go next

• Search every home for sale in Colorado
• The Colorado home buyer's guide
• How we help Colorado buyers
• Co-buying a house in Colorado with friends and relatives
• Mortgage options for first-time homebuyers in Colorado
• Meet the Kenna Real Estate Group agents

Talk to the Kenna Real Estate Group

The Kenna Real Estate Group, Keller Williams DTC, helps Colorado couples and co-buyers get two pre-approvals to compare, pick the vesting with the title company, and close with a co-ownership agreement in the file instead of a handshake. Call or text 303-955-4220. A live person answers. Not a robot, not a phone tree. Then search every home for sale in Colorado.