Should I buy a house with a friend?
No.  This amount of money is not appropriate for friends to go in on. Although you could consider buying a house with a business partner, have the contracts drawn up, see an attorney, read up on the penalties if one of the partners doesn't hold up their end from the law's point of view. Also, since this is a business arrangement, write and sign all sorts of details regarding the penalties amongst the partners (not just the law) when one person doesn't hold up. It isn't that you don't have good intentions, or that you couldn't do it just fine if no problems ever happen.  The issue is that over the course of a mortgage, which is at least several years, something is very likely to come up.  If you and your friend aren't prepared to think about all those issues and how to handle them, you will lose a friend, probably a house and your good credit. I wouldn't go into business with my best friend because I want him to stay my best friend. Unlike others who have answered the question - I have done this.  Here is my experience - your mileage and friendship may vary: I bought a condo years ago with a longtime childhood friend.  We did it for all the reasons you mentioned - sick of renting and not building equity, were both young, single professionals who had the money.  The market crashed we have both since married and moved on to own other properties with our spouses.  Now we rent out the condo as selling in the current market is not doable..  It's not an ideal situation but that is because of the real estate market - not who I bought with. You need to discuss very openly all of the following scenarios, as well as others I can't think of right now I am sure: If you aren't both 100% in sync with these questions then do not do it. I never understand why some people would buy with a girlfriend/boyfriend but not a good personal friend.  You're more likely to have a falling out with your significant other then a long time close friend.  My advice, have honest, open conversations, about all possible scenarios.  If you feel necessary put somethings down into some sort of legal agreement - with us it was not, and still isn't necessary. "I'll chime in here with the ""don't do it crowd."" I think it's fraught with ugly possibilities. However, you may, for various reasons, decide to say, ""to hell with it, we'll make it work."" If that is the case, treat it like a business transaction and not an emotional transaction. Work up a binding contract with your attorney for how the two of you will handle issues such as: Of absolutely critical importance is the bail-out clause: how will you handle it when one person says, ""Sayonara.""  None of this ensures a smooth road - god knows I wouldn't do it - but it could help protect your sanity and some of your investment down the road. Good luck." I did this about 8 years ago with a buddy in Chicago for the reasons specified in the original post.  As other posters have suggested, we discussed  a lot of the same questions listed above, figured out the possible scenarios, and then had a lawyer draw up a contract.  We bought a 3 bedroom house, and rented out the 3rd bedroom.  Overall, it was a great experience.  We both built equity while having a renter pay a third of the mortgage.  Plus the property tax and interest on the loan were tax deductible.  Compared with renting an apartment, it made us  a lot more money.  In the end, we sold the house, and split the profits.  Assuming you have the personalities to make it work, I say go for it. A real life experience. A friend of mine did that with his housemates. They bought a house together as students and it worked for them. The tricky bit is to have a very good contract with your housemates as to how the venture should work.  What if? Somebody can't pay, somebody can't enjoy the house (on an extended trip), somebody wants out (marriage, etc.) It worked for my friend... I'd be curious to compare current rent with what your overhead would be with a house. Most single people would view your current arrangement as ideal. When those about to graduate college ask for money advice, I offer that they should start by living as though they are still in college, share a house or multibedroomed apartment and sack away the difference. If you really want to buy, and I'd assume for this answer that you feel the housing market in your area has passes its bottom, I'd suggest you run the numbers and see if you can buy the house, 100% yours, but then rent out one or two rooms. You don't share your mortgage details, just charge a fair price. When the stars line up just right, these deals cost you the down payment, but the roommates pay the mortgage.  I discourage the buying by two or more for the reasons MrChrister listed. Sure, form an LLC with an attorney's advice. You need a buyout clause, operating agreement, etc. If you're not married, never buy a home for personal use with someone else. There are lots of good reasons not to do this. HOWEVER if you do decide to, there are four things you need to consider:
I don't think there's a conclusive answer to your question, but I have a real world example for you.   I was in a similar situation for almost 6 years (I was the friend, but also the one with the highest pay). I rented a house, my name on everything. I made a separate contract with both my friend and his GF and they both rented a room from me. I looked up the total m2 of the house and divided the rent by that number. Multiplied by room sizes I knew what everyone had to pay for their personal space, I simply divided the rest by 3 to find the remainder of everyone's rent.   I don't know the numbers anymore, but here's an example: house = 150 m2 room 1 = 10 m2 room 2 = 15 m2 room 3 = 25 m2 shared space = 100 m2 rent = 800,-   This gives 5.33 per m2 The shared space is worth 533.33 Divided by 3 is 177.77, So the total rent for each room is: room 1 = 10*5.33 + 177.77 ≈ 231 room 2 = 15*5.33 + 177.77 ≈ 258 room 3 = 25*5.33 + 177.77 ≈ 311   We divided the rest of the costs (gas, power, water, etc...) evenly. This was fair in our case, because the rent was directly tied to the size of the rooms. The only thing we had left to do was give the poorest person the smallest room. A friend tweeted a similar question regarding student loans, and I responded with Student Loans and Your First Mortgage.  The punchline is that you need to be aware of the 28/36 ratios in a bank qualifying you for your mortgage. Even though you have a house, you may not be aware of this.  Simply put, 28% of gross monthly income can be used to qualify for your house burden, loan, taxes, etc. 36% for total debt. So the student loan may fit in that 8% gap, and paying it all off reduces the cash you have without helping you borrow more money.  3-5 years is short term, and to that part of the question, this money should not be invested in anything at risk. A 3 year treasury or CD would be it, in my opinion. It's hard to financially justify buying a house just for one person to live in. You end up being 'over-housed' (and paying for it). Would you rent a whole house for yourself?  A condo might be an option - but TO ME the maintenance fees are hard to take (and they are notorious for increasing dramatically as the building ages). You could consider buying a house that includes 1 or 2 rental units, or sharing with a friend. You do run the risk of having bad tenants though, and you have additional maintance to deal with. Having a rental unit in my modest house has worked out very well for me (living alone), and I have been VERY fortunate with tenants. "Not at all impossible. What you need is Fundamental Analysis and Relationship with your investment. If you are just buying shares - not sure you can have those. I will provide examples from my personal experience:  My mother has barely high school education. When she saw house and land prices in Bulgaria, she thought it's impossibly cheap. We lived on rent in Israel, our horrible apartment was worth $1M and it was horrible. We could never imagine buying it because we were middle class at best. My mother insisted that we all sell whatever we have and buy land and houses in Bulgaria. One house, for example, went from $20k to EUR150k between 2001 and 2007. But we knew Bulgaria, we knew how to buy, we knew lawyers, we knew builders.  The company I currently work for. When I joined, share prices were around 240 (2006). They are now (2015) at 1500. I didn't buy because I was repaying mortgage (at 5%). I am very sorry I didn't. Everybody knew 240 is not a real share price for our company - an established (+30 years) software company with piles of cash. We were not a hot startup, outsiders didn't invest. Many developers and finance people WHO WORK IN THE COMPANY made a fortune. Again: relationship, knowledge!  I bought a house in the UK in 2012 - everyone knew house prices were about to go up. I was lucky I had a friend who was a surveyor, he told me: ""buy now or lose money"". I bought a little house for 200k, it is now worth 260k. Not double, but pretty good money!  My point is: take your investment personally. Don't just dump money into something. Once you are an insider, your risk will be almost mitigated and you could buy where you see an opportunity and sell when you feel you are near the maximal real worth of your investment. It's not hard to analyse, it's hard to make a commitment." "Pre-edit, Pete mentioned that he feels real estate agents would (a) like you to buy as much house as you afford, and (b) would love to show you three houses and have you choose one.  As a real estate agent myself, I believe his warnings were understated. As with any industry, there are good and bad people. Agents are paid to move houses. If the median US home is under $200K, and commissions average say 5%, the $10,000 to be gained is split between the buyer brokerage and selling agent. The $5000 to each is then shared with 'the house.' So, this sale would net me $2500, gross. Move one a week, and the income is great, one per month, not so much. Tire kickers will waste an agent's time for a potential decision to wait another year and continue renting. Their obligation is to tell you the truth, but not to offer financial advice.  Remember the mortgage crisis? It seems the banks and brokers aren't watching out for you either. They will tell you what they'll lend you, but not what you can afford. These numbers are worlds apart.  I strongly recommend a 20% downpayment. The FHA PMI calculator shows that a 90% LTV (i.e. a 10% downpayment) for a $100K house will cost you $1200/yr in PMI. Think about this. For the $10,000 that you didn't put down, you are paying an extra $1200 each year. This is on top of the interest, so even at 5%, that last $10,000 is costing nearly 17%. If you can't raise that $10K (or whatever 10% is on that house) in cheaper funds, you should hold off. Using the 401(k) loan for this purpose is appropriate, yet emotionally charged. As if suck loans are written by the devil himself.  ""Buy the biggest house you can""? No. I have a better idea. Buy the smallest place you can tolerate. I have a living room (in addition to family room) that has been used 3 times in 20 years. A dining room we actually use. Twice per year. When your house is 50% too big, you pay 50% more property tax, more utility bills, and more maintenance. Closing costs, commission, etc, isn't cheap, but the lifetime cost of living in a too-big house is a money pit." It's hard to financially justify buying a house just for one person to live in. You end up being 'over-housed' (and paying for it). Would you rent a whole house for yourself?  A condo might be an option - but TO ME the maintenance fees are hard to take (and they are notorious for increasing dramatically as the building ages). You could consider buying a house that includes 1 or 2 rental units, or sharing with a friend. You do run the risk of having bad tenants though, and you have additional maintance to deal with. Having a rental unit in my modest house has worked out very well for me (living alone), and I have been VERY fortunate with tenants. Since then I wanted to move out of this house because the property taxes are so high and the mortgage payment is a killer. As I understand this is a property jointly owned by your parents and you. As they are not living staying in the house, you have taken over the mortgage payments for this house along with any other maintenance. If you move out of this house; the rent is expected to cover the cost of maintenance and mortgage payments. Are we better of staying in Jersey where our family and friends are?  This is an individual decision. It is not just family and friends, but also schooling of kids, penitentially if you change jobs would it also entail changing residence as the workplace would be more near from current home than the new home. I want to convince my wife to make this move because it will save us at least 800 month, but she fails to see how buying a second home is financially sound because we have to lose our savings and we have to pay interest on our second home. There are quite a few posts on first-time-home-buyer Some question like this one and this one and this one are good reads. There are historically times when the Mortgage EMI becomes equal or less than Rent paid. In such times it is good to buy home, than pay rent. Otherwise quite a few invest advisor's mention that fools buy house and wise live in it. There are advantages to buying as well advantages to renting. There is no simple answer and it depends on multitude of factors. If you buy a townhouse, you often are in a condominium arrangement in the US (when you're really in a rowhouse in particular).  So that's a downside right away: you have to have a HOA, or at least some sort of common agreement, though it might not have formal meetings.  Everyone who owns an interest in the entire group of townhouses gets some say in landscaping and such. Beyond that though, townhouses (and similarly, condominiums) are often easier to own (as they don't have as much maintenance that you have to do), but more expensive because you pay someone to do it (the landscaping, the external repairs, etc.).  You likely don't have as much control over what the external looks like (because you have to be in agreement with the other owners), but you also don't have to do the work, unless your agreement is to collectively do the mowing/landscaping, which you should know in advance.   I wouldn't underestimate the value of easier, by the way; it's very valuable to not have to deal with as many repairs and to be able to go a week without thinking about mowing or watering.  In that sense it can be a nice transition into ownership, getting some-but-not-all of the obligations.  But if that's something you really value, doing the landscaping and mowing and whatnot, that's relevant too.  You can always tell your realtor to look for townhouses where the owners do some/all of the landscaping, though that opens up a different can of worms (where you rely on others to do work that they may not do, or do well). They're also somewhat noisier; you may be sharing a wall (but not necessarily, air-gap townhouses do exist) and either way will be closer to your neighbors.  Does noise bother you?  Conversely, are you noisy?  In a college town this is probably something to pay attention to. Price wise, of course stay well within your means; if being close to the city center is important, that may lead you to buy a townhouse in that area.  If being further out isn't a problem, you'll probably have similar choices in terms of price as long as you look in cheaper areas for single family homes.