i bought a house with a friend and we are currently making payments, if one of us dies what happens

I believe the estate of the deceased would be responsible, but you may have other rights such as selling to property if you cannot afford it.

My standard disclaimer: I am not offering legal advice, assume I do not know the law in your state and that I am just making suggestions for starting points for when you do speak with an attorney. Do NOT rely on anything I write and contact a lawyer in your area immediately after reading my posting.

Let me add that you both need wills and perhaps a contract that addresses this situation. See a lawyer right away.