Divvy FAQs


About Divvy


How does Divvy work?

Divvy is an innovative new option that combines the best of renting and owning. Our program is 3 years long, and allows you to rent with an exclusive option to buy, while simultaneously building real equity in your future home.

Our program has a few simple steps

  1. You pick your dream home.
  2. Our investors buy the home on your behalf.
  3. You’ll put a minimum of 2% down and sign a 3 year lease. Every month, a portion of your payment goes towards building equity.
  4. Once your lease ends, your equity converts into a down payment, allowing you to get a mortgage and buy the remainder of the property. Or if you choose not to buy, our investors will sell the home and you’ll receive the full value of your equity at that time.

Divvy allows you to save up for a mortgage while sharing valuable appreciation, all while enjoying your future home today.


How does Divvy compare to a mortgage?

Divvy is not a mortgage. Divvy is a shorter-term program that offers you more flexibility, and can be a great stepping stone to a mortgage.

If you’re saving up to buy a home, Divvy gives you a great advantage. The equity you build with Divvy appreciates as your home appreciates. That means fewer unexpected surprises when it comes to saving for your down payment. If you’ve built 10% equity with Divvy, you’ll have 10% equity no matter how quickly housing prices rise in your area.


How does Divvy compare to renting?

If you’re a renter who wants to share the wealth-building effects of homeownership, but who isn’t quite ready for the full commitment of a mortgage, Divvy is a great new alternative.

Divvy allows renters to participate in their city’s home price appreciation. Simply rent a home with us for 3 years. Unlike with a typical lease, you aren’t throwing money away - you’re building equity with every payment.


Who actually owns the home?

During your 3 year lease, Divvy’s investors own the home. You’ll have an exclusive, documented right to purchase the home at any time, at a pre-specified price.


How much do I have to put down?

Divvy has a minimum required down payment of 2%. This translates to roughly $4,000 minimum, but can be more if you have a larger pre-approved home budget.


What price do I buy the home at after 3 years?

Your Future Purchase Price will be predetermined when your lease starts. Your Future Purchase Price will be our best estimate of your home’s value 3 years from now.


Are there any fees for using Divvy?

If you choose to buy your Divvy home after 3 years, you will not pay any fees. Not only will you not pay Divvy any fees, but you won’t have to pay typical buying or closing costs. That’s because we’ll be transferring the home directly from our investor to you.

If you choose not to buy your Divvy home, we’ll simply ask that you cover half the costs of selling the home, or 1.5%.


What cities does Divvy operate in?

Right now Divvy is focused on the Seattle area (that includes surrounding cities like Renton and Issaquah), but if you’d like to see us in your city, let us know!


Your approval process


How does the underwriting process work?

Divvy’s underwriting process is fast and simple. It has 3 steps. After you complete the first step, we can give you a pre-qualification letter. After you complete all 3 steps, we can give you a pre-approval letter.

  1. Fill out our pre-qualification form. You’ll receive this once you sign up and create an account.
  2. Send us 2 years of bank statements & tax returns.
  3. We’ll perform a hard credit check with your permission, and only once a home has been identified.

What are Divvy’s requirements for pre-approval?

Divvy requires the following:

  • That applicants be employed (or self-employed)
  • Ability to pay at least $1,500 a month
  • Ability to put at least $4,000 down
  • No bankruptcy or foreclosure in the past 12 months
  • Limited outstanding debt (DTI <50%)

If you’re wondering if you qualify, sign up for a quick initial call with one of our home-buying specialists who can answer your questions.


Does Divvy have a minimum credit score requirement?

No.


How do you decide my home budget?

Divvy pre-approves you for a home budget based on 3 criteria:

  • Can you afford a minimum 2% down payment on this home?
  • Can you comfortably afford the monthly rent on this home?
  • Can you build a enough equity in this home within 3 years to get a mortgage, if you so choose?

Choosing your home


What homes are available to purchase with Divvy?

Almost all homes on the market in your area! Divvy approves homes based on their location, condition, and price. So as long as the home is free of major maintenance issues, and not severely mispriced, we’ll generally approve it. Divvy is currently unable to approve manufactured homes or undeveloped lots.


Can I use a broker?

Absolutely, in fact, we recommend it. If you don’t already have a broker we’re happy to introduce you to one.


What if I want to buy a home that I can’t find on your website?

Let a Divvy home-buying specialist know and we’ll review the home immediately!


Who actually buys the house?

Our investors do! Their offers are very competitive.


Your lease


How long is my lease?

Divvy’s leases are 3 years long. That means you’re committing to rent this home for at least 3 years (unless you buy it within that time). As you shop for homes, you’ll be able to see each home’s lease terms, so you have all the information you need before you make any decisions.


How does Divvy determine my monthly payment?

Your monthly payment will have 2 components: rent, and equity-building payments.

Your monthly rent is determined by normal conditions in your local market, and may increase a small amount each year. You’ll be aware of these pre-scheduled increases before you sign the lease.

Divvy’s goal is to make sure every participant successfully becomes a homeowner, so we work with you to set equity ownership goals. Typically, equity-building payments are calculated to ensure participants have 10% equity in their home by the end of 3 years. Depending on your financial situation, your plan may call for you to build more or less equity.


What if I need to leave during the 3 year lease?

Because the investor has purchased this home just for you, there are penalties for breaking your lease. Should you move out before the 3 years are up, we’ll refund you 50% of the money you’ve invested in home equity.


Who is responsible for home maintenance?

As the home’s future owner, you’ll be responsible for taking good care of this house. You won’t have a landlord. Divvy only approves homes that are in good condition without any outstanding maintenance issues, so you won’t be expected to undertake any projects.


Am I allowed to fix-up or repair the home?

You’re free to undertake minor home improvement projects at your own expense (i.e. repainting, changing the landscaping, etc.).


Your equity


What does “building equity” mean?

“Equity” is the percentage of your home that you own. For instance, in a typical mortgage, a home-buyer might make a down payment of 20%. That means they have 20% equity, and own 20% of their home. The other 80% is debt (their mortgage).

With Divvy, instead of debt, our investors help you buy your home.


How does Divvy help me build equity?

Your down payment converts to equity, as does a portion of every monthly payment. If you choose to buy the home, this equity serves as part or all of your down payment. If you choose not to buy the home, you’ll still receive the market value of your equity.


What portion of my monthly payment goes towards equity?

This depends on your particular plan and financial situation. Generally, it’s at least 20%, which is similar to the proportion of principal versus interest in the early years of a typical 4.5% mortgage.


What does “sharing appreciation” mean?

Divvy generally operates in areas where home prices are increasing. Therefore a home that’s worth $300,000 in year 1 may be worth $400,000 by year 3.

Let’s say you have $15,000 of equity in year 1, or 5%. With Divvy, in year 3, even if you haven’t made any additional payments, you’ll still have 5% equity, which will now be worth $20,000.

In other words, the equity you build with Divvy is true equity that can go up or down in price depending on how the market changes.


Your options after 3 years


What happens after the 3 year lease?

After your lease ends, you’ll have 2 options: to purchase the home, or to sell. This is your decision - not ours.

If you decide to purchase the home, you’ll need to apply for and obtain a mortgage. Divvy can’t provide you with one, although we’ll be as helpful as possible during this process.

If you decide to sell, Divvy will take care of listing the home and selling it. You’ll have to move out, and will receive your equity’s value after the home is successfully sold.


How do you determine my Future Purchase Price?

Divvy projects future home values as accurately as possible, taking into account your city’s historic appreciation data, population growth, housing supply, etc.


Can I buy the home before 3 years ends?

You can buy the home at any time at the Future Purchase Price (which doesn’t change).


What if I decide not to buy the home?

You’ll split closing costs with the investor, which means you’ll pay 1.5% of your home’s new value. You’ll also receive the full market value of your equity. For instance, if you’ve built 10% equity in a home that’s now worth $400,000, you’ll receive $40,000 minus a $6,000 closing cost, or $34,000.

By using divvyhomes.com you agree to the Privacy Policy and the Terms of Use .

633 Folsom Street Floor #7
San Francisco, CA 94017
(530) 734-8890

© 2016-2017 Divvy