Home Buying Challenges Faced by LGBTQ Couples

Since the monumental U.S. Supreme Court decision in 2015, the dream of owning a home together has taken one step closer to reality for many LGBTQ couples.

However, even with federal and state protections offered to LGBTQ couples, there are still many challenges facing same-sex couples who want to buy a home. 

LGBTQ couples must be aware of the challenges and possible solutions available to enjoy a smooth home buying process.

While every LGBTQ couple will face different issues when buying a home due to both their personal circumstance and their local housing market, four common problems often get in the way.

Discrimination

The root cause of many issues any LGBTQ couple will face is discrimination, both systemic and personal. 

On a systemic level, LGBTQ discrimination has existed for decades. Although the Fair Housing Act was passed in 1968, LGBTQ couples during that time had a difficult time purchasing property together because sexual orientation was not recognized as a protected class. 

While some cities and states offered protection for LGBTQ couples on the basis of sexual orientation as early as the 1970s, it was only in January 2021 that protection was offered on a federal level.

President Biden issued an executive order that directed federal agencies to include sexual orientation, gender expression, and gender identity under the definition of “sex.” 

In February 2021, the Department of Housing and Urban Development (HUD) issued a memorandum announcing that all policies follow the executive order.

It can be more difficult to police discrimination against LGBTQ couples on a personal level because many of these offenses occur on a micro level.

It can be as subtle as a mortgage broker agency offering subpar services to an LGBTQ couple or as overt as the practice of redlining. 

Lack of Quality and Affordable Housing

Many LGBTQ couples will consciously decide to purchase homes in locations that have a history of being LGBTQ-friendly.

However, this usually means that these neighborhoods are located in urban centers with high market values, such as Cleveland, Chicago, or Los Angeles. 

In a report released by Zillow, LGBTQ couples who want to purchase homes in known LGBTQ-friendly locations (or “gayborhoods”) can expect to pay a premium.

This can mean that housing is worth more than four times that compared to similar metropolitan areas in some cities. 

LGBTQ couples who can afford these prices can undoubtedly look forward to a community that offers a sense of safety and acceptance.

However, this also means that those who cannot are forced to search for options in cities not known for LGBTQ acceptance.

Fewer Loan Sources

Finding a mortgage lender to work with can also pose a challenge for LGBTQ couples. While LGBTQ-friendly real estate agents are willing to help, navigating the process can still be difficult for queer home buyers. 

The first step, of course, is finding LGBTQ mortgage lenders. Luckily, the National Association of Gay and Lesbian Real Estate Professionals has a wealth of resources available.

This network can be accessed to find LGBTQ-friendly mortgage companies. However, as with the problem of quality housing, many of these companies operate within major metropolitan areas.

LGBTQ couples looking for homes in rural areas may find it challenging to secure a mortgage lender to work with them.

Income Disparity

Historically, LGBTQ couples have found it difficult to achieve financial stability for many reasons, from discrimination in the workplace to lack of access to marriage benefits.

There can also be repercussions for lower credit scores and accumulated debts, making applying for loans even more difficult.

These hurdles have generally slowed down the economic progress for many LGBTQ couples, making it difficult to save up enough for a down payment. 

6 Home Buying Tips

While there are no surefire methods for an LGBTQ couple to apply for a mortgage and purchase a house, there are some ways to make the process easier.

Here are six home-buying tips for LGBTQ couples to consider before buying a home.

1. Know your rights as an LGBTQ homebuyer

LGBTQ couples need to know their rights as individuals and as homebuyers. Federal protections apply to all American citizens, but state protections can differ from one state to another.

LGBTQ-friendly states such as New York and Illinois may have more state laws for LGBTQ rights than others, such as North Carolina or Alabama. 

Take the time to research all relevant LGBTQ homebuyer laws in your home state before you even consider applying for a mortgage.

Depending on where you live, there is a good chance that there are LGBTQ-friendly real estate agents who can guide you through these laws.

You can also reach out to local chapters of legal organizations such as the American Civil Liberties Union (ACLU) or Lambda Legal.   

2. Research your potential neighborhood’s history of support

Keep in mind that even if you live in a state that historically does not support and protect LGBTQ rights, individual counties and even neighborhoods can make all the difference.

Nowhere is this disparity more apparent than in the Lone Star state.

Texas was notorious for being one of the least accepting of same-sex marriages. However, LGBTQ couples living in Houston and Austin reported enjoying a relative sense of acceptance from their communities. 

While it does help to do online research, there is nothing better than getting first-hand information.

Visit any potential neighborhood to get to know the locals and inquire about their history with LGBTQ residents.

Dig a little deeper into the area’s culture, specifically if there are any LGBTQ-centered events such as local pride parades.

3. Review your premarital assets

Whether legally married or not, any LGBTQ couple who wants to purchase a home together should review their premarital assets.

Legally married couples are entitled to a legal classification called “tenancy by the entirety,” which protects the couple’s assets from creditors in the case of the death of one spouse. 

Couples who are not legally married but have been together for decades may qualify as “joint tenants with rights of survivorship.”

Under this title, the death of a spouse ensures that property will be passed on to the surviving partner. However, lenders can still place a lien on the property and collect on any debts owed.

It is advisable to work with legal counsel knowledgeable in LGBTQ-related affairs regarding property and ownership before purchasing a home. All legal options can be studied to find the best options. 

4. Improve your credit scores

Before applying for any mortgage, ensure that your credit scores are good enough. This applies to all couples, whether LGBTQ or heterosexual.

Get a clear handle on your assets and liabilities and a transparent income statement.

Creditors will look for a score of anywhere from 700 to 749 to provide favorable rates, while a credit score of 750 or higher gives the borrower the highest chance for the best rates.

Even if you have a low credit score, this does not mean that you will be automatically disqualified from being approved for a mortgage loan.

However, this may entail applying for private mortgage insurance (PMI) with a third-party company. 

5. Be realistic about your options

House hunting can be a romantic exercise, especially if both partners have wanted to buy a home together for a long time.

You might have preferences regarding the location and type of home you wish to buy. However, tempering your expectations is the smart thing to do.

Always strive to balance what you can afford and what you qualify for. Be sure to make allowances for unforeseen expenses; you may have budgeted for the mortgage payments, but have you considered property taxes?

Again, it is in your best interest to speak with an LGBTQ-friendly real estate agent who can best guide you through this process to discuss your options.

Compromises are not always a bad thing!

6. Define legal ownership in your partnership clearly

When buying a home with an LGBTQ partner, it is best to define legal ownership in writing.

Typically, this process is straightforward for straight couples; all property purchased together is split equally between the two parties.

With LGBTQ couples, however, it might not be as simple. If the couple is not legally married, there can be confusion about who legally owns what.

A polyamorous relationship will come with even more ownership problems.

To avoid any problems in the future, a legal written contract can help clearly define ownership among all concerned parties.

Whether you’re in a monogamous LGBTQ relationship or a polyamorous one, seek legal counsel to understand your position thoroughly. 

Additional Read: Mortgage Access and LGBTQ Community

A and N is a Safe Space for Mortgage Advice

Owning a home together is an exciting decision for any LGBTQ couple. We want to help make sure that the decision is a happy and comfortable one. Contact our team of experienced mortgage brokers today at A and N Mortgage to get the best help possible.