Divvy Homes, a tech enabled real estate platform, launches its new homeownership program to give customers the flexibility of renting with the financial benefits of homeownership. The $7M funding round -- led by Caffeinated Capital with participation from Max Levchin's startup studio HVF, the venture capital firm DFJ, and a credit facility -- will be used to expand operations into Cleveland and Atlanta, accelerate growth, and build out the team. With more than 200 people applying to its program every week, Divvy has already helped about a dozen families purchase a home since its launch two months ago.

US housing affordability has been a growing problem since 2008, and has resulted in a greater number of families renting than ever before. According to a study from the Urban Institute, about 6 million "missing mortgages" would have been issued if lending standards were more reasonable. Rising rents, higher home prices, stagnant incomes, and stricter lending practices have made it difficult for buyers to purchase homes. As a result, young families are seeing their dream of homeownership escape them year after year.

Divvy provides a more flexible alternative by allowing renters to build equity credits as they rent. The renter can select any home on the market, and then Divvy will purchase the home of their choosing. Divvy customers can enjoy the home now while they build up equity credits, pay down debts, and show enough steady income to be mortgage-ready in 3 years - smoothing out the transition from renting to owning.

"Housing affordability is a massive problem," said Raymond Tonsing, general partner and founder of Caffeinated Capital, one of Divvy's investors. "We're excited about bringing a tech-enabled solution to market to help more young buyers bridge the gap between renting and owning. Divvy provides a more flexible homeownership option."

"Real estate is an industry plagued by manual processes," says Max Levchin, Divvy investor, CEO of Affirm, and Paypal cofounder, "The technology Divvy is building around application processing, underwriting, and managing these homes will allow Divvy to scale operations and provide better pricing to consumers compared to traditional institutions."

Divvy's product can be broadly characterized as a tech enabled rent-to-own business. The industry is not new, but has traditionally been viewed as predatory where the landlord's knowledge of pricing and contracts have allowed them to take advantage of renters. Divvy's program is designed to change that.

In the Divvy program, a buyer will pick out any home for sale and Divvy will purchase it. The buyer will typically put 2% down, then pay a monthly amount that includes both rental and equity payments. The equity portion builds credit in the home, achieving 10% equity credit in the home over the span of 3 years. At this time, Divvy provides the option to buy out the reminder of the home with a mortgage, using the credit as a down payment. Participants also have the option to buy the home at any time during the 3 years should they find themselves ready beforehand.

"Our highest priority is to educate, support, and partner with our home buyers to make sure they transition smoothly into homeownership," says Brian Ma cofounder and CEO of Divvy, "Our program is specifically designed to be fair and transparent - we want every home purchase to be a win for our customers."

More info here: https://www.divvyhomes.com.

About Divvy
DivvyHomes.com is a tech enabled homeownership platform that allows renters to build equity credits as they rent. The renter selects any home on the market, Divvy purchases it, and the renter builds equity credits in the home with every payment. Divvy's mission is to close the housing affordability gap by providing trusted, transparent, and simple homeownership products for families. Divvy was incubated in Max Levchin's startup studio HVF and is backed by Caffeinated Capital, HVF, and DFJ.