Tenancy in Common Loans (TIC Loans)
Non-QM Loan Programs | John Thomas Team | Primary Residential Mortgage
Tenancy in Common Loans (TIC Loans): The Complete Guide to Co-Owning Property With Your Own Mortgage
How multiple buyers can purchase and finance property together — each with their own individual loan, their own ownership percentage, and their own financial independence
I talk to buyers every week who want to purchase property with a partner, a family member, or a close friend — and they all ask the same question: “Is there a way to do this where I’m not responsible for the other person’s mortgage if something goes wrong?”
The answer is yes. It’s called a Tenancy in Common (TIC) loan, and it’s one of the most misunderstood financing structures in real estate. Tenancy in Common ownership has been around for decades, but individual Tenancy in Common financing — where each co-owner gets their own separate mortgage rather than sharing one big loan — is a newer development that changes the game for buyers who want to co-purchase without being tied to someone else’s financial decisions.
In this guide, I’m going to break down exactly what Tenancy in Common ownership is, how the financing works, who it’s designed for, what the risks are, and what you need to qualify. By the time you’re done reading this, you’ll have a clearer picture of whether a TIC loan is the right move for your situation.
What Is Tenancy in Common?
Tenancy in Common (TIC) is a legal form of property co-ownership where two or more people each hold a separate ownership interest — called a fractional interest — in the same property. Each person owns a defined percentage of the whole property, not a physically divided section of it.
Here’s what that means in practice: if you and two partners buy a four-unit building as tenants in common, you each own a percentage of the entire building — not one specific unit. A formal TIC Agreement (a legally binding contract between all owners) dictates who has the right to occupy which unit, how expenses are divided, what happens if one owner wants to sell, and how disputes are resolved.
TIC Ownership Percentages: Flexibility Is the Point
One of TIC’s biggest advantages over other co-ownership structures is that ownership percentages do not have to be equal. If you’re contributing more money to the purchase than your co-buyer, your ownership percentage can reflect that. Two people could own 70%/30%, three people could own 50%/30%/20%, or any other split that reflects their actual investment and agreement.
Each owner’s percentage controls how equity is allocated when the property is sold — but it does not restrict anyone’s right to use and access the property. All co-owners have full access to the entire property, governed by the terms of the TIC Agreement.
TIC vs. Joint Tenancy vs. Tenancy by Entirety: What’s the Difference?
Most people don’t know there are multiple ways to legally co-own real estate. Before we go further, it’s worth understanding how TIC compares to the other common ownership structures — because the differences are significant and affect both your financing options and what happens to your ownership interest when life gets complicated.
| Feature | Tenancy in Common (TIC) | Joint Tenancy | Tenancy by Entirety |
|---|---|---|---|
| Who Can Use It | Any two or more people | Any two or more people | Married couples only |
| Ownership Shares | Unequal percentages allowed | Must be equal (50/50, 33/33/33, etc.) | Both spouses own 100% jointly |
| Right of Survivorship | No — share passes to your heirs | Yes — share passes to remaining owners | Yes — passes to surviving spouse |
| Can Sell Your Share Independently | Yes, without others’ consent | Yes, but converts arrangement to TIC | No — both must agree |
| Estate Planning Flexibility | High — leave your share to anyone | Low — share goes to co-owners | Low — share goes to spouse |
| Financing Options | Individual loans or group loan | Typically a shared loan | Typically a shared loan |
| Best For | Friends, investors, family, unequal contributors | Equal partners wanting simplicity | Married couples |
How Does Tenancy in Common Financing Actually Work?
This is where most guides get vague. Let me be specific, because the financing structure is the whole ballgame when it comes to whether TIC is practical for your situation.
There are two ways to finance a TIC purchase:
Option 1: Group Financing (Blanket Loan)
All co-owners sign onto a single mortgage together — one loan, secured by the entire property, with all owners as co-borrowers. This was historically the only TIC financing available, and it’s still used today in some situations.
The problem: If one co-owner stops paying, all other owners are responsible for making up the shortfall — or the entire property faces foreclosure. You’re not just exposed to your own financial risk. You’re exposed to everyone else’s, too. A job loss, a divorce, a health crisis affecting any co-owner can put your investment at risk even if you’ve never missed a payment in your life.
Option 2: Individual TIC Financing (Fractional Loans)
Each co-owner gets their own separate mortgage — their own note, their own underwriting, their own payment, secured by their individual fractional ownership interest. If one co-owner defaults, only their share is affected. Your mortgage stays intact.
The Non-QM Tenancy in Common loan programs I offer use the individual fractional financing model. Each borrower is underwritten, approved, and responsible for their own loan — while the TIC Agreement governs everyone’s rights and responsibilities on the property itself.
Who Is a Tenancy in Common Loan Built For?
Tenancy in Common financing isn’t for everyone — but for the right buyers, it solves problems that no other loan product addresses. Here are the most common situations where TIC loans make sense:
1. Friends or Family Pooling Resources to Buy Together
Two siblings who want to buy a two-unit property together. Three friends who want to invest in a multi-family building. A parent helping an adult child buy a home by co-purchasing with them. TIC gives each person their own ownership stake, their own mortgage, and a formal legal structure that protects all parties — even if relationships change over time.
2. Buyers Who Can’t Qualify Alone
Maybe your income alone doesn’t support the purchase price you’re targeting. Maybe your credit score is solid but you’re light on down payment. Co-purchasing under a Tenancy in Common structure can make deals possible that wouldn’t qualify as a single-borrower transaction. Each buyer is still underwritten individually — but pooling down payment resources makes more properties accessible.
3. Real Estate Investors Building Portfolios
Investors who want to share the cost of a multi-unit property without the complications of an LLC or partnership structure often use TIC. The individual financing model means each investor controls their own leverage and financing independently. DSCR income documentation is also available for TIC loans — meaning the property’s rental income, not your personal income, qualifies the loan.
4. High-Cost Market Buyers
In markets where entry-level properties start at $600,000–$800,000+, TIC co-purchasing can be the difference between owning and renting indefinitely. When two buyers combine their down payment resources and income, properties that were out of reach individually become entirely achievable.
5. Buyers of Multi-Unit Properties With Separate Occupancy Rights
A property with 2–4 units where each owner intends to occupy one unit is a natural fit for Tenancy in Common ownership. Each owner has clear occupancy rights to their unit spelled out in the TIC Agreement, and each gets their own financing. This is a cleaner structure than buying as co-borrowers on a single loan for an owner-occupied multi-family property.
Tenancy in Common Loan Program Guidelines
Here’s a breakdown of what TIC loan programs typically look like when structured as Non-QM individual fractional financing:
TIC Loan Program at a Glance
- Loan Amounts: $250,000 to $2.5 Million
- Maximum LTV: Up to 85% (lower LTV may apply for non-warrantable properties)
- Minimum FICO: 660
- Occupancy Types: Primary residence, second home, investment property
- Income Documentation: All Non-QM doc types accepted — W-2, bank statements, 1099, P&L, DSCR, asset qualifier
- Property Types: 2–4 unit residential properties with individual occupancy rights
- TIC Agreement: Required — must be reviewed and approved by lender prior to closing
- Interest Rate: Typically 0.5%–1% above comparable conventional rates
- Down Payment: Typically 15%–30% depending on credit, loan amount, and property type
Income Documentation: All Types Accepted
One of the most useful aspects of Tenancy in Common Non-QM loans is that income documentation is flexible. Each co-buyer qualifies for their own loan based on their own individual income documentation. One co-buyer could use W-2 income while another uses bank statements as a self-employed borrower. There is no requirement that all co-owners use the same income documentation type — because they have completely separate loans.
- W-2 employees: Traditional income documentation
- Self-employed borrowers: 12–24 months bank statements
- Independent contractors: 1099 income documentation
- Investors qualifying on rental income: DSCR qualification using the property’s cash flow
- High-net-worth borrowers: Asset qualifier programs available
The TIC Agreement: The Most Important Document in the Deal
Lenders who offer individual Tenancy in Common financing require a formal, written TIC Agreement as a condition of approval. The lender’s legal team reviews this agreement before closing to confirm it meets underwriting requirements. This is not optional — and it’s not a bad thing. A well-drafted Tenancy in Common Agreement protects every co-owner and the lender.
At minimum, a qualifying TIC Agreement should address:
- Each owner’s percentage interest and occupancy rights (which unit each owner has exclusive rights to)
- How operating expenses, property taxes, insurance, and maintenance are divided
- What happens if one owner wants to sell their interest (right of first refusal for other owners)
- What happens if one owner defaults on their loan or stops paying shared expenses
- Dispute resolution procedures
- What happens upon the death of a co-owner (and who inherits their interest)
- Subordination rights — who has priority if refinancing occurs
Pros and Cons of Tenancy in Common Ownership: The Honest Breakdown
I’m not here to oversell Tenancy in Common if it’s not the right fit. Here’s the real picture:
- More buying power — pool resources to afford properties you couldn’t purchase alone
- Individual financial protection — your co-owner’s default doesn’t affect your mortgage
- Flexible ownership percentages — ownership reflects actual contribution, not forced equality
- Estate planning control — your share passes to your heirs, not automatically to co-owners
- All Non-QM doc types available — self-employed, DSCR, 1099, bank statement all work
- Tax deductions — each owner deducts their proportionate share of mortgage interest and property taxes
- Investment flexibility — works for primary residences, second homes, and rental properties
- TIC Agreement is critical — a poorly written agreement can create serious problems down the road
- Any co-owner can sell their interest — you could end up with an unknown co-owner you didn’t choose
- Rates slightly higher — typically 0.5%–1% above comparable conventional loans
- Not all lenders offer Tenancy in Common financing — you need a specialist, not a standard bank
- Shared property taxes — even with individual loans, property taxes may come as a single bill that must be divided per the agreement
- Partition actions — if co-owners can’t agree, a court can force a sale of the property
- Complex to exit — selling your fractional interest is harder than selling a whole property
Tenancy in Common Loans and Tax Benefits: What You Need to Know
Each co-owner in a Tenancy in Common reports their share of income, deductions, and expenses separately on their own tax return — proportionate to their ownership percentage. This is actually a significant advantage compared to other co-ownership structures.
- Mortgage interest deduction: Each owner deducts their share of mortgage interest paid on their individual loan
- Property tax deduction: Each owner deducts property taxes proportionate to their ownership percentage
- Rental income: If the property generates rental income, each owner reports their proportionate share on Schedule E
- Depreciation: Investor owners can depreciate their ownership percentage of the property’s value
- Capital gains: When you sell your Tenancy in Common interest, capital gains are calculated based on your proportionate share of the original purchase price versus your proportionate share of the sale price
What Happens If a Co-Owner Wants Out?
This is one of the most common questions I get about Tenancy in Common ownership — and the answer depends heavily on what your TIC Agreement says. Here are the most common exit scenarios:
Selling Your Share to Another Buyer
A Tenancy in Common owner can sell their fractional interest independently, without the other owners’ consent. Most Tenancy in Common Agreements include a right of first refusal — meaning you must offer your share to the existing co-owners before selling to an outside party. If they don’t match the offered price within a set timeframe, you’re free to sell to an outside buyer. That buyer then steps into your role as a Tenancy in Common owner and party to the agreement.
Selling Your Share to the Other Co-Owners
The simplest exit — your co-owners buy you out. The price is negotiated (or determined by independent appraisal if required by the TIC Agreement), and the departing owner is removed from title and their loan is paid off at closing.
Selling the Entire Property
If all co-owners agree to sell, the property is listed and sold as a whole. Proceeds are distributed proportionate to each owner’s percentage interest after all loans and costs are paid.
Partition Action (The Last Resort)
If co-owners cannot agree on how to handle the property — especially if there’s a dispute about whether to sell — any co-owner can file a partition action in court. A judge can order the property physically divided (rare for multi-unit residential) or more commonly order a forced sale with proceeds divided proportionately. Partition actions are expensive, slow, and damaging to relationships. A well-drafted Tenancy in Common Agreement with strong dispute resolution provisions is your best defense against ever ending up here.
How Tenancy in Common Loans Compare to Other Non-QM Investor Options
| Loan Type | Best For | Ownership Structure | Income Doc | Max Loan |
|---|---|---|---|---|
| TIC Loan | Co-buyers needing individual loans | Tenancy in Common | All Non-QM types | $2.5M |
| DSCR Loan | Solo rental investors | Individual or LLC | Rental income / lease | $5M |
| Bank Statement | Self-employed solo buyers | Individual | 12–24 months deposits | $3M+ |
| Asset Qualifier | High-net-worth, retired buyers | Individual | Liquid assets | $5M |
| Fix & Flip | Short-term rehab investors | Individual or LLC | Asset/project based | $7.5M |
The key differentiator for Tenancy in Common loans is the co-ownership structure. If you’re buying alone and want flexible income documentation, a DSCR or bank statement loan is more straightforward. If your situation specifically involves co-purchasing with another party and you both need individual financing — Tenancy in Common is the product built for that.
Frequently Asked Questions: Tenancy in Common Loans
Can I get a Tenancy in Common loan if I’m self-employed?
Yes. Tenancy in Common loans are available with all Non-QM income documentation types, including bank statement loans (12–24 months of deposits), 1099 loans for independent contractors, and P&L loans using a CPA-prepared profit and loss statement. Your co-buyer can use a different documentation type — since you each have separate loans, your income verification is completely independent of theirs.
What happens to my mortgage if my co-owner defaults on their loan?
With individual TIC financing (fractional loans), your mortgage is completely separate from your co-owner’s. If they default, only their fractional interest is subject to foreclosure. Your loan is not affected. This is the primary advantage of individual TIC financing over a shared group loan where all owners are co-borrowers on a single mortgage.
Do all co-owners have to qualify at the same time?
For a purchase transaction, all co-owners typically close simultaneously — each with their own individual loan. Each borrower goes through their own underwriting process independently. One co-buyer’s qualification timeline doesn’t directly affect another’s, but all loans generally need to close together as part of the same transaction.
Can I use a Tenancy in Common loan for an investment property?
Yes. Tenancy in Common loans are available for primary residences, second homes, and investment properties. For non-owner-occupied Tenancy in Common purchases, DSCR income documentation is often available — meaning the property’s rental income qualifies the loan rather than your personal income. This is particularly useful for investors co-purchasing a multi-unit rental property.
What is a Tenancy in Common Agreement and why does the lender need to review it?
A Tenancy in Common Agreement is a legally binding contract between all co-owners that defines each person’s ownership percentage, occupancy rights, expense responsibilities, exit procedures, and dispute resolution terms. Lenders require review of this document because Tenancy in Common financing is secured by fractional interests rather than whole-property title. The lender needs to confirm the agreement properly protects their collateral and meets underwriting requirements before approving individual loans.
What credit score do I need for a Tenancy in Common loan?
Most Tenancy in Common loan programs require a minimum FICO score of 660. Higher credit scores typically unlock better rates and may allow lower down payment requirements. Because each co-owner is underwritten independently, one co-buyer’s credit score does not affect the other’s loan approval or rate.
What happens to my Tenancy in Common interest when I die?
Unlike joint tenancy, Tenancy in Common has no automatic right of survivorship. When a Tenancy in Common owner dies, their fractional interest passes to whoever they have named in their will or estate plan — not automatically to the other co-owners. This is one of Tenancy in Common’s biggest estate planning advantages: you can leave your ownership interest to your children, a spouse, or any other heir you choose. The new owner then steps into the Tenancy in Common arrangement under the terms of the existing agreement.
Can ownership percentages in a Tenancy in Common be unequal?
Yes — and this is one of the key advantages of Tenancy in Common over joint tenancy. Ownership percentages can be any split that all parties agree to: 50/50, 60/40, 70/30, or any other arrangement. Unequal percentages are common when co-buyers contribute different down payment amounts, or when the units being occupied have different market values. Each owner’s loan amount and equity position reflects their ownership percentage.
How to Apply for a Tenancy in Common Loan
Tenancy in Common financing is more complex than a standard mortgage — which means working with a loan officer who actually knows this product matters. Here’s how the process typically works:
- Schedule a Consultation: Before anything else, have a conversation about your co-purchase situation, both buyers’ income and credit profiles, the property you’re targeting, and which doc types each buyer will use. We’ll confirm Tenancy in Common is the right structure and identify which program fits.
- Engage a Real Estate Attorney: Before you go under contract, have an attorney draft or review your TIC Agreement. This document needs to be ready for lender review during underwriting.
- Each Buyer Submits Their Own Application: Because this is individual financing, both borrowers apply separately. Both applications are submitted simultaneously so underwriting can proceed in parallel.
- Lender Reviews the TIC Agreement: Your lender’s legal team reviews the TIC Agreement to confirm it meets underwriting requirements. This typically takes 3–5 business days.
- Underwriting: Each loan is underwritten independently — income, credit, assets, and the property all reviewed. Plan for 14–21 business days.
- Both Loans Close Simultaneously: All buyers close at the same time. Each borrower signs their own loan documents. Both TIC interests are recorded on the same deed.
Is a Tenancy in Common Loan Right for You?
Here’s a straightforward way to think about it. A Tenancy in Common loan is likely the right move if:
- You want to co-purchase a property with a partner, family member, friend, or business associate
- You need individual financing that isn’t tied to another person’s credit or financial situation
- You’re buying a multi-unit property where each co-owner will occupy a different unit
- You’re pooling resources with another buyer to access a property you couldn’t purchase alone
- You want estate planning control — the ability to leave your interest to your own heirs
- Your income documentation doesn’t fit the conventional W-2 mold
A TIC loan is probably not the right move if:
- You’re buying alone — there are simpler Non-QM programs for solo buyers
- You and your co-buyer have very different ideas about long-term plans for the property
- You don’t have a solid, attorney-drafted Tenancy in Common Agreement ready before closing
- You’re buying a single-family home that can’t be divided into separate occupancy units — TIC financing works best for multi-unit properties
Ready to Explore a Tenancy in Common Loan?
Co-purchasing real estate is one of the smartest financial moves available in today’s market — if it’s structured correctly. Let’s talk through your situation, your co-buyer’s situation, and whether Tenancy in Common financing is the right path for both of you.
John Thomas | NMLS #38783
Senior Loan Officer | John Thomas Team at Primary Residential Mortgage
302-703-0727 | [email protected]
Disclaimer: This content is for informational and educational purposes only and does not constitute financial, legal, or lending advice. Loan programs, rates, guidelines, and terms are subject to change and are subject to individual borrower qualification. Not all programs are available in all states. Tenancy in Common financing involves complex legal and financial considerations — consult a licensed real estate attorney and mortgage professional before entering into any co-ownership arrangement. John Thomas | NMLS #38783 | Primary Residential Mortgage, Inc. | E
