Key takeaways

  • Shared ownership and equity loans are homeownership options designed for people with low-to-medium incomes.

  • Both options let you acquire a home at a lower cost in exchange for a share of your house equity, restrictions on sale, or both.

  • Minimum qualifications such as FICO credit score and loan-to-value (LTV) ratio vary among providers.

Shared ownership or equity loan: Which option should you choose?

These two low-cost homeownership programs help aspiring low-to-medium income homeowners acquire property.

In 2020, the U.S. Department of Housing and Urban Development reported that 15.2 million aspiring homeowners needed financial support of up to $100,000. With home costs increasingly dramatically since then, there’s a need for more help.

A graph showing the rising cost of housing between 1965 and August 2021

Times are tough, but you can own a home with the right plan. In this article, we’ll explore the differences between shared ownership and equity loans.

What is shared ownership?

Shared ownership (also called fractional ownership or co-ownership) is a housing agreement where you co-own a home with a second party by purchasing a portion of the property.

In this agreement, you’ll co-purchase a home with another person, and agree on how to share the property costs and equity.

Here is a video on how co-ownership works:

WATCH: Shared Homeownership: a Faster Way to Build Equity and Access Homeownership

What Is an equity loan?

An equity loan is money that you borrow or get to help you buy a new, primary residence in exchange for a portion of your home’s future equity.

1. Plans provided by government organizations or non-profit organizations

Equity loans come in two forms:

  • Shared appreciation – In this plan, you get a loan or second mortgage to buy a house. You then repay the loan in full at the time of resale, together with the agreed share of home equity appreciation.

  • Subsidy retention – Here, you buy below-market-rate (BMR) housing in exchange for a share of your home’s future equity. An example is San Francisco’s BMR program.

2. Private equity lenders

In a private equity agreement, you borrow interest-free money from a lender to cover the cost of buying your home. In exchange, you’ll give up a share of your property’s equity upon sale.

Shared ownership versus equity loan eligibility

With shared ownership, you just need to agree with your co-owner on how to share property equity and costs.

For an equity loan with a government or non-profit organization, you must:

  • Be a first-time homebuyer

  • Sell your current home before buying the new home

  • Have low to medium income

Agreements vary among private lenders. For instance, many private equity lenders require a FICO credit score of at least 550.

Fees and costs for shared ownership versus equity loan options

Homeownership costs include legal fees, mortgage costs, moving costs and service charges.

Infographic showing costs of buying a home in America

Selling a shared-ownership home versus selling an equity-loan home

Selling a shared-ownership home

  • You can sell your fraction of the co-owned property at any time.

Selling a home with an equity loan

  • For equity arrangements with the governments or non-profits:

  • Restrictions on the resale value can run even up to 30 years.

  • You have to sell to an eligible buyer (e.g., those that fall within set minimum income levels).

  • The selling organization will claim a share of your appreciated home equity value.

For private agreements:

  • Your lender will claim the agreed share of home equity. Most investors take 15-25% of the current property valuation.

  • Your investor shares in the loss should house prices fall.

  • Some investors allow you to buy them out if you want to repay your loan before the term ends, or if you don’t want to sell your property.

Pros and cons of shared ownership


  • You share the cost of buying a home without sales restrictions.


  • It can be difficult to find a buyer for your fraction of the property.

  • You can’t solely make decisions that affect the co-owned property.

Pros and cons of equity loans


  • Subsidized prices insulate you if home prices fall.

  • You get a healthy return on your investment if house prices increase.

  • There’s no interest on money borrowed.


  • There are restrictions on renovations and sales if you’re buying a home through a government organization or non-profit, limiting your ability to build wealth.

  • Luxury properties and smaller homes may not qualify.

Other ways to utilize equity

A home equity agreement (HEA) from Unlock Technologies is a new option available to you.

We pay you, in cash, for the right to share in the proceeds from selling your home in the future. In a typical transaction we might provide cash equal to 10% of the home value today in exchange for 16% of the home value in the future.

The investment Unlock Technologies makes is not a loan. There are no monthly payments – not now, not ever. You can use the proceeds any way you want, and you continue to own your home just as you always have.

This may have several benefits. You might see a spike in your FICO score. You may be able to reduce your credit card/household/medical debt.

Contact Unlock Technologies today for details on a home equity agreement.

The blog articles published by Unlock Technologies are available for informational purposes only and not considered legal or financial advice on any subject matter. The blogs should not be used as a substitute for legal or financial advice from a licensed attorney or financial professional. Links in our blog posts to third-party websites are provided as a convenience and are for informational purposes only; they do not constitute an endorsement of any products, services or opinions of the corporation, organization or individual. Unlock Technologies bears no responsibility for the accuracy, legality, or content of external sites or that of subsequent links.