Determining an accurate view of your home buying budget is a crucial part of Divvy setting tenants up for success in the transition from renting to owning. We take great care in determining each of our customer’s individual budgets. Similar to a mortgage lender, we evaluate your budget based on what we believe you can afford monthly, ensuring that your payments to Divvy and other debts never exceed 50% of your monthly income. We believe this system is best for the customer and best for the housing market.
We recognize that our determination of your budget may not align with your aspirations; perhaps you want a home or neighborhood that requires a higher budget. It is important to note when working with Divvy, our determination is not final. You can take many steps to boost your budget and land the home of your dreams.
1. Show more income
Do you believe that we have a full, clear picture of your income? If not, you can provide us more documentation to ensure we have calculated the most applicable budget for you. Any documentable income maintained for at least the last six months can be used in your application. Remember, there are many types of income flows, and they are all relevant for our purposes at Divvy. Extra income from a side job such as driving with Uber or Lyft, child support payments, or investment dividends can and should be utilized to determine your final budget.
2. Pay off your debts
In creating your budget, we utilize a ratio of your monthly income and your monthly debt payments to help us determine a clear picture of what you can afford. One way to affect this ratio is to increase your income. But another great strategy is to reduce your debts. By paying off some of your debt accounts in full, you can drastically affect your debt to income ratio and improve your Divvy budget.
3. Add a co-buyer
Adding a co-buyer is by far the most reliable method to boost your Divvy budget. In some instances, adding a co-buyer can as much as double your budget.
However, there are a few rules to account for when adding a co-buyer:
1) Your co-buyer must live in the house with you
2) Co-buyers must satisfy the same requirements as the initial application, such as showing documentable income and possessing a credit score ranging above 550.
4. Invest more money down
Putting more money down will have a small effect on your budget, but one that could help bring your monthly payments into line with your desired home. This option is usually best if your target home is only slightly out of range for your Divvy budget. As a general rule of thumb, every additional $1k placed into a downpayment will allow $30 per month extra in your monthly payment budget.
Remember, your initial budget is not the end of the line with Divvy. By following any or all of these four steps, you can adapt your budget to match your home aspirations.
We want you to obtain the best house for you and your situation, and together we can work to ensure your needs are met safely, responsibly, and at an affordable price point.