Homeownership startup Divvy announced that it has raised $30 million in equity and debt from Andreessen Horowitz, with participation from seed investors Caffeinated Capital, DFJ and PayPal Co-founder Max Levchin.
The San Francisco-based startup has created a gradual homeownership program that allows buyers to purchase a percentage of any home (between 2 percent and 10 percent) and buy more ownership over time. The buyers only pay rent on the portion they don’t yet own and can buy the entire home at any time.
"At Divvy, we believe everyone deserves the opportunity to own. The only way to break the cycle and get families onto the property ladder is to rethink housing," the company wrote in a blog post.
Buyers must put down at least 2 percent for a down payment, with Divvy picking up the rest of the tab. The company then collects a monthly amount that includes both market-rate rent and an equity payment until the residents have a 10 percent stake in the home.
According to reports, by partnering with Divvy, tenants — some of whom have credit scores as low as 550 — can boost their scores and eventually secure a mortgage through the Federal Housing Administration, which requires a credit score of at least 580. According to Divvy CEO Brian Ma, the company wants residents to reach this goal within three years, after which the company will sell and transfer the property over to them.
"We get the privilege of buying homes for deserving families every day, and it’s a responsibility we don’t take lightly. We are eager to direct our passion, capital and technology [toward] creating a world where people who live and work in their communities have a stake in the prosperity of their neighborhood — and with over 2,000 applications every month, there’s no shortage of demand for this new way to own," according to the blog post.