How Does Co-Investing in a Home Work?

Co-investing in a home can mean either buying a house with the help of an investor or, in the case of existing homeowners, using an investor to tap equity in your house. These strategies can often be helpful for buyers and homeowners who don’t meet the eligibility standards of traditional mortgage and home equity lenders.

Are you considering a home co-investing strategy to buy a house or tap your home equity? This guide will walk you through your options, as well as some home co-investing companies to consider.

In this guide:

What does co-investing mean?
How co-investing for homebuyers works
How co-investing for homeowners works
Companies that co-invest in your home

What does co-investing mean?

Co-investing works differently depending on what type of customer you are. If you’re looking to buy a home, a co-investor would essentially go in on the home purchase with you. While you’d retain ownership (and be on the home’s title), the investor would hold some of the property’s equity. You’d make monthly payments to your investor and would also be free to purchase more equity from them—or potentially sell off more—over time.

If you already own a home, you’d use a co-investor to leverage your equity. The investor would buy a share of your home’s future value and give you a lump sum payment in return. You’d then buy out their share later on, usually within 10 to 30 years or when you sell your home.

In both cases, an investor gets a share of your home’s appreciation. These strategies also allow you to achieve your goals without taking on new debt or meeting the strict requirements set by mortgage lenders.

How co-investing for homebuyers works

Buying a home with a co-investor means you share your property’s equity with the investor from the start. Put simply: They’ll share in the profits if your home increases in value and the loss if it does the opposite.

Here’s how Haus, which offers this type of co-investing, explains it, “purchase what you can, and only take on the upside and risk for what you own. Because we share equity, Haus can offer significantly reduced monthly payments.”

In Haus’s case, you can pay as little as $1,000 per month. You can also buy back equity at any point or cash in on more if you need funds later on. The company doesn’t share its minimum requirements for the program, but it does come with monthly payments for the full 10 years of the term. At that point, you can renew your partnership or buy out Haus’s shares of your equity at the home’s current value.

There are also co-investing companies that help you with your down payment. With Point, for example, the company helps you make a 20% down payment in exchange for some of the home’s equity. You can then more easily qualify for a mortgage loan, ideally with a lower interest rate.

Pros of co-investing to buy a home

You can buy a house with less of your own cash upfront
You may have a lower monthly payment
You don’t take on extra debt
You retain ownership of the home

Cons of co-investing to buy a home

You could lose out on wealth if your home appreciates
These programs aren’t offered in every state

How co-investing for homeowners works

The other type of co-investing—often called a home equity sharing agreement—lets you sell your home equity in exchange for cash. The company gives you a lump-sum payment in exchange for a percentage of your home’s future value, and you can use the funds however you wish.

These arrangements typically last for 10 to 30 years and require no monthly payment. You just need to buy the investor out by the end of the term at the home’s current value (you can also sell the home or refinance to cover the costs).

The requirements for home equity sharing vary, but some co-investors allow for credit scores as low as 500, making them good alternatives to traditional home equity products for people with bad credit.

Home equity sharing companies also offer significant funding—up to $600,000 in some cases—but you’ll need to have a loan-to-value ratio of no more than 85% (including your mortgage loan) to qualify. Your home’s location, value, mortgage balance, and how you use the property will also factor into how much the investor will offer you.

As with the other type of home co-investing, you’ll retain ownership of your house and hold the title. The investor will simply benefit if your home appreciates in value.

Pros of co-investing to tap your home equity

You don’t take on extra debt
No monthly payments
You retain ownership of the home
Low credit scores are allowed

Cons of co-investing to tap your home equity

You could lose out on wealth if your home appreciates
These programs aren’t offered in every state

Companies that co-invest in your home

Haus

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Co-investing for homebuyers

You are on the title and can customize the investment so they match the terms you want
Buy more equity anytime or sell when you need cash
Control your equity from your Haus dashboard

Haus offers a “partnership” co-investing program that allows homebuyers to purchase homes without a mortgage. You pick the home (in a qualifying area), and the company breaks the home’s equity into pieces. You then purchase the shares of equity you can afford upfront, and Haus purchases the rest. You’re free to buy back more as you’re able to during the 10-year term. Once your term expires, you either sell the house, buy out Haus’ shares, or renew your partnership.

The details:

Who it’s for: Homebuyers
Where it’s available: California, Oregon, Washington, and Colorado
Term: 10 years
Repayment: Fixed monthly payments; must buy out or renew partnership at the end of the 10-year term
Eligibility: Not disclosed
Maximum investment: Not disclosed
Ownership: You own the home and are on the title; Haus maintains a deed of trust on the property

Unison

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Co-investing for homeowners

Investments from $30,000 to $500,000
Get a cash estimate in 60 seconds with no impact on your credit
Term length of 30 years

Unison offers home equity sharing agreements for existing homeowners. You sell a portion of your home’s future value to the company and get a cash payment in return. You buy out Unison’s share at the end of the 30-year term, either by selling the home, refinancing, or in cash.

The details:

Who it’s for: Homeowners
Where it’s available: Arizona, California, Colorado, Delaware, Florida, Illinois, Indiana, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, Washington, Washington D.C., Wisconsin
Term: 30 years
Repayment: No monthly payments; must buy out, refinance, or sell at the end of the term
Eligibility: Minimum 620 credit score; maximum LTV of 70%
Maximum investment: $500,000 / up to 15% of your home’s value
Ownership: You own the home and are on the title

Final thoughts

Co-investing can be a smart way to either buy a house or tap the equity in your existing home, particularly if you’re not sure that you would qualify for a traditional mortgage loan.

If you’re considering co-investing to achieve your goals, make sure you shop around. Every home co-investing company has slightly different offerings, eligibility requirements, and fees, so choosing the right one is critical.