At this point, the lease is ended and the buyer takes over mortgage payments on the home. Only once the buyer successfully closes on the home, Divvy will refund the prorated rental amount for that month back to the buyer. As the buyer works through the process of closing on the home, they're still required to make rental payments. This is the cheaper of the buyback prices and will save the buyer the most money in the long run.ĭivvy prorates rent for buyers in the buyback phase, including early buybacks. The 18-month price is an average of Divvy’s original purchase price and the expected price of the home after 3 years. According to Divvy, the buyback price is around 5-15% higher than Divvy’s original purchase price. One price is set at 18 months the other at 36 months. The 36-month price is based on the forecast of the home’s appreciated value during this period of time.

Buying back your home earlyĪt any point during the rental period, the buyer can use the equity they’ve built in the home to make a down payment.ĭivvy sets two buyback prices for homeowners who wish to purchase their home early. Divvy manages the buyback process, including the remittance of a buyer’s home savings fund, on behalf of the buyer.

Divvy works directly with the buyer’s lender to proceed with the process. The buyback process can begin once a buyer obtains pre-approval from a lender. Approximately 10-25% of each month’s rental payment is set aside in this fund to put towards a future down payment. Divvy and the buyers enter a 3-year lease period which is designed to give buyers enough time to become eligible for a regular mortgage.Īs part of the lease agreement, a portion of each month’s rent goes towards a home savings fund. Read more: Should you pay off your mortgage or invest? Purchase and buyback processĪfter a buyer chooses the home they want to buy Divvy closes on the purchase and takes on the buyer as a tenant. If they decide homeownership isn’t for them, they have the option to walk away from the home, taking the equity they’ve built up with them. Buyers can buy back their home from Divvy and take ownership of it. When the lease term expires, buyers should have enough set aside to cover the down payment needed to qualify for a traditional mortgage. This allows a renter to essentially test out whether or not they actually want to take on all the responsibilities of owning a home. The remaining purchase price, closing costs, taxes, and insurance are all covered by Divvy.Īfter Divvy closes on the home, a buyer enters into a 3-year rental agreement with them. The rental term is designed to help make buyers “mortgage-eligible.” To do that, rent payments include an extra “home savings” fee that helps buyers set aside money to cover a future down payment while still paying rent on the home.ĭuring the lease term Divvy acts as a landlord, covering maintenance and repairs. This allows a buyer to get into their home for less than $6,000 in upfront costs. In exchange, the buyer compensates Divvy with a 2% payment of the home’s selling price. Once the home is selected, Divvy pays for the house in cash on half of the buyer. Related: Rent to own – A home buying option with no down payment required How does it work?Ī buyer can select a home from one of the markets Divvy operates in. But unlike landlords, Divvy defers to the renter to coordinate and make decisions on repairs, giving prospective buyers the opportunity to test out home ownership and learn about what it takes to own a home.ĭivvy offers a path to homeownership by allowing buyers to build equity in a home while still renting it. That means that individuals who may not have enough for a down payment, or are self-employed, or have a low credit score - or simply aren’t sure if they’re ready to own a home in the first place - will still have an opportunity to buy a home through Divvy. After the rental term is up, buyers can buy their home.ĭuring the three-year lease period, Divvy covers maintenance and repair costs - just like a landlord would. The buyer then makes rent payments while also setting aside money for a future down payment through Divvy. The company purchases a home on a buyer’s behalf.

Monthly payments will likely be higher than with traditional rentingĭivvy Homes is a new way to help homebuyers purchase a home through a rent-to-own model.

Missing a payment can significantly impact a buyer’s credit score.

Divvy is only available in certain housing markets.

Homebuyers enter a 3-year lease with Divvy that can’t be broken.

Divvy app