How should I choose between Divvy and a mortgage?

Divvy’s program is a great solution for people who don’t quite qualify for a mortgage, but it’s good to understand the differences between our rent-to-own program and a traditional mortgage.

What are the main differences?

With Divvy’s program, you rent your home while you save up to buy. That means you’re still paying fair market rent every month, rather than paying off a mortgage. Your monthly payment to Divvy also includes “home savings”—about 25% of your payment. Those savings are yours to use when you’re ready to qualify for a mortgage, toward your down payment, closing costs, and any other expenses. 

Here are some of the key differences between Divvy and a mortgage:

  • With Divvy, you rent your home while you save up to buy it
  • You pay fair market rent every month
  • There’s no interest on your monthly payments while using Divvy. With a traditional mortgage, you’ll have an interest rate.
  • You only need 1-2% of the home’s value to move in with Divvy, versus 3-20% with a traditional mortgage
  • Divvy makes all-cash offers when we buy the home, which can be more attractive to sellers than a mortgage
  • We can close fast—usually in as little as 17 days

Divvy’s program also helps get you mortgage-ready through free credit counseling. Plus, your monthly payments are reported to major credit bureaus, so on-time payments can help you improve your credit score!

Who is a good fit for Divvy’s program?

We’re a great fit for people who are ready to try out homeownership but can’t qualify for a mortgage. Maybe you haven’t had time to save up for a down payment, or you had a financial hiccup in the past—Divvy can be a great solution to help you get on the path to homeownership.

Our program is also a great option for people who were very close to qualifying for a mortgage but didn’t get there in the end. We’ve seen mortgage lenders tighten their requirements during the pandemic, meaning people who would have qualified 9 months ago may not today. Divvy can help you secure the dream home you’ve been looking for, even if your mortgage falls through.

I think I can qualify for a traditional mortgage—how should I choose?

We usually recommend you take the traditional mortgage route if you’re able to qualify—we know our program isn’t the right fit for everyone! Divvy is a bridge for people who want to become homeowners, but can’t quite get there today. 

Divvy’s all-cash offer can also give home buyers a leg up in competitive markets. If you’ve been struggling to win the home you want, gaining Divvy’s buying power could be a good solution. Our program also gives you the flexibility of renting. If you’re moving to a new city or area, you can use Divvy to find a home you love and try it out before fully committing to buying it.

Our main goal is to help people become homeowners—whether that takes 3 years or 3 months. Our program lets you buy back at any time, but it generally takes longer to become a homeowner versus a traditional mortgage. 

However, if you’re not sure you want to commit to homeownership yet, or if you still haven’t saved quite enough for a down payment, Divvy is a great solution!

Think Divvy could be a good fit for you? Get started today! It’s free and only takes a few minutes.

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