Some FAQs

About ZeroDown

What is ZeroDown?

ZeroDown is an affordable homeownership solution in the San Francisco Bay Area.
Homebuying isn’t just expensive here—it’s cost-prohibitive. So the majority of people end up renting, as a cheaper, but wasteful alternative.

But what if there was an option between renting and owning? That’s where ZeroDown comes in: we buy the home you want. You move in and pay us a fixed monthly fee, building ownership in your ZeroDown home each month. Home equity-rewards* vest to you monthly, just like stock options at your workplace.
ZeroDown blends the security of ownership with the flexibility of renting.

What are equity-rewards*?

Equity-rewards* represent the portion of a home that you own. For example, if the current appraised value of your home is $1,000,000, and you own 5% equity-rewards, then your equity-rewards amount to $50,000, or 5% of your home value.

How do I build ownership with ZeroDown?

Traditionally, homeowners accumulate home equity over time as they pay down their mortgage debt. With ZeroDown, residents can start building net worth up without taking on a mortgage.

Each monthly payment you make earns you equity-rewards which represent a percentage of the ZeroDown home that you own. The equity-rewards you build have a two-year cliff, which means that as long as you live in a ZeroDown home (and make payments toward it) for at least two years, a portion of the home is yours.
After two years, you can buy your home from us , using your equity-rewards toward a down payment, or move and cash out by selling your equity-rewards to us.

Who is ZeroDown for?

ZeroDown is best for people who are:

  • Thinking about buying a home, but don’t have a down payment. For example, you may be actively paying off student loans and have fewer savings despite a high paying job.
  • Looking for flexibility. ZeroDown lets you move out without the hassle of selling the home.
  • Not able to find a rental property they like. You might like a neighborhood closer to work or with good schools but realize that for-sale inventory of homes is a lot larger than rentals.

In which areas of the country does ZeroDown operate?

ZeroDown currently operates in the San Francisco Bay Area.

This sounds too good to be true! How does ZeroDown make money?

As a ZeroDown resident, you’re not just our customer—you’re our homeownership partner. This means that our goals and incentives are aligned: we both want your ZeroDown home to appreciate in value. In addition to world-class real estate agents, you get all the benefits of ZeroDown's real estate expertise and data science, when it comes to making a decision on which homes to consider.

We also make money from our partnership with trusted real estate broker partners via commission rebates.

ZeroDown Guarantee

Who owns the title to the home?

ZeroDown owns the title to the home. If at any point (after 2 years) you choose to purchase the home from us, we transfer the title to you.

You will be leasing the home from us with an option to purchase. Once we close the home of your choice, you enter into two agreements with us - a lease agreement and an option to purchase agreement (which gives you the first right to purchase). The agreements will clearly lay out all the necessary details including but not limited to the duration and terms of the lease, payment schedules, your rights and responsibilities as a ZeroDown resident, required disclosures, terms of your option to purchase the home from us.

What happens if my home appreciates in value?

If your home appreciates in value, then the value of your equity-rewards increase at the same rate. For example, if you own 5% equity-rewards in a million-dollar home, your credits are worth $50,000. Say the million-dollar home increases in value by 50% to 1.5 million, then your equity-rewards increase in value by 50% to become $75,000.

What happens if my home depreciates in value?

If your home depreciates in value, then your equity-rewards decrease at the same rate. But because your equity-rewards only represent a portion of the home’s overall value without the obligation to buy more, you face much less risk than you would with a traditional mortgage, and you’re protected on the downside. For example, if you own a 5% share of a million-dollar home which depreciates in value to $900,000, then your equity-rewards decrease in value from $50,000 to $45,000. So you face a loss of $5,000 instead of $100,000.

ZeroDown vs Alternatives

How should I evaluate ZeroDown against other options?

ZeroDown represents a new approach to homeownership, developed with would-be homebuyers’ interests in mind. Unlike banks or other lenders, we don’t require you to sign a long-term contract. Instead, we strive to give you more leeway and control in the homebuying process. In that way, there’s no real comparison between traditional options and ZeroDown. If you’re going to compare anyway, it’s a good idea to weigh all the possible costs and benefits, keeping in mind the buying, living, and selling experiences.

How does partnering with ZeroDown compare to taking on a mortgage?

ZeroDown offers the benefits of homeownership without the drawbacks of a mortgage. Mortgages are loans that add to your total debt, which you pay down on a monthly basis. With ZeroDown, you never take on any debt but instead accrue home equity-rewards on a monthly basis.
Other key differences:

  • Mortgage lenders often require down payments. ZeroDown, as our name suggests, doesn’t.
  • Mortgages are a long time commitment (30 year) Vs. a minimum 2 year commitment with ZeroDown.
  • Mortgages involve financial risk. If a mortgaged home depreciates in value, homeowners face the entire loss. ZeroDown, on the other hand, provides downside protection. If a ZeroDown home depreciates in value, ZeroDown residents face only a small percentage of the loss.

How does partnering with ZeroDown compare to paying rent?

ZeroDown offers the flexibility and minimal risk of renting, with a few key differences:

  • Renters don’t build equity-rewards in their properties. ZeroDown residents do.
  • Renters don't have access to all the homes available on the market, ZeroDown residents do.
  • Renters don’t always have the option of buying the property they’ve been residing in. ZeroDown residents have the option of buying their home after two years.
  • Renters face restrictions on home modifications. ZeroDown residents are able to customize their homes and remodel their spaces.

Does qualifying for ZeroDown affect my credit score?

Qualifying for ZeroDown requires a soft credit check, which won’t ding your score.

The ZeroDown Process

How does ZeroDown’s process work?

Partnering with ZeroDown looks like this:

Sign-Up and Qualification - You fill out an online application, linking us to your bank account(s). That gets us started with a picture of your finances, and we work with you to determine a monthly payment you can afford and the maximum value of the home you can buy.

Choosing Your Home - After qualifying, you’ll be introduced to our partner agent, who’ll help you find and tour properties for sale in your preferred neighborhoods. At this point, if you’ve already identified a property you like, feel free to let us know.

Purchasing Your Home and Move-In - Once you’ve pinpointed the home you like, we’ll go through the bidding process together. When our offer is accepted, ZeroDown will close the home on your behalf. You’ll enter into an agreement with us that clearly lays out all the necessary details including but not limited to move-in date, monthly payment, and your rights and responsibilities as a ZeroDown resident.

How do I know if I will qualify for ZeroDown?

We use your annual household income, assets, and your credit/debt obligations to determine the upper limit on your monthly housing expense. This limit, in turn dictates the maximum value of the ZeroDown home that we can qualify you for.

If the likelihood of finding a Bay Area home (single family, condo, townhouse)—whose value is below the limit you qualify for and in a neighborhood you prefer—is low, then we will communicate our decision to not go forward with your application.

Some of the factors that make for a strong application in the Bay Area are annual household income greater than $200,000, liquid assets, fewer debt obligations, low credit utilization, and very good or excellent credit score.

What kinds of homes can I choose with ZeroDown?

You can choose a single-family home, townhouse, or condo within your qualified price range with ZeroDown. Condos, however, come with some provisions and we’ll go through those with you, should the need arise.

Who pays the closing costs?

Usually, it's advisable for the buyer to budget up to 3% of home value for closing costs. In comparison, with ZeroDown you just have to pay a flat, fixed program fee of 1% of home acquisition cost. ZeroDown takes care of the closing costs associated with the property purchase.

What price range should my house be in?

Once you sign up, you’ll go through a qualification process with ZeroDown to determine the most suitable price range based on your finances. Typically, ZeroDown homes cost between $650,000 and $1,500,000.

Can I use my own agent?

We prefer that you work with one of our partner agents, whom we’ve selected for their deep knowledge of the Bay Area housing market. That said, we’re happy to partner with your agent if you’ve already been working with one and trust them.

ZeroDown Homeownership

What does ZeroDown’s vesting schedule look like?

Your home equity-rewards vest to you over five years. We use a monthly vesting schedule with a cliff of two years.
For example, if you partner with ZeroDown to purchase a million-dollar home in San Jose, your vesting schedule will look like this:

Duration Equity-Rewards Vested
After 12 months (*) 0.00%
After 24 months 2.76%
After 36 months 4.17%
After 48 months 5.57%
After 60 months 6.90%
(*) Vesting schedule has a cliff of 2 years / 24 months.

How many years do I have to live in a ZeroDown home before my equity-rewards vest?

ZeroDown equity-rewards have a two-year cliff, meaning that you have to live in your home for at least two years before the equity-rewards are yours.

What happens if I want to leave my ZeroDown home before two years?

If you leave before two years, you won’t vest into the equity-rewards in your home.

What happens if I want to leave my ZeroDown home after two years?

After two years, you can move out at any time and
- Buy the home from us, using your earned equity-rewards toward a down payment.
- Cash out your accumulated home equity-rewards.

Can I buy my home from ZeroDown?

Yes, though you’re not under any obligation to do so.

After you’ve lived in a ZeroDown home for two years, you’ve vested into your equity-rewards and can purchase your home. You can then get a conventional mortgage and buy the home from us at a price we agreed on at the time of your move-in.

How is the purchase price determined when I want to buy my home from ZeroDown?

At the time of signing the option agreement (before move-in), we determine and specify what the base purchase price of the home is. This base purchase price is determined based on average appreciation of that neighborhood and comparable homes over the last 10 years.

If you want to buy you home from us, we will together appoint an independent, qualified third-party appraiser to determine the fair market value of the home.
If the appraised value of the home is below the base price, then you buy the home from us at the base price.
If the appraised value of the home is above the base price, this means that the home price appreciation has exceeded our expectations. In this scenario, you can buy the home from us at a discount of 3% from the appraised value.

Note that your equity-rewards applies towards the purchase price as purchase credits, regardless of the scenario.

Can I cash out my home equity-rewards when I leave?

Yes, you can receive a cash payment for your accumulated home equity-rewards if you decide to leave after two years. Once you notify us of your intent to cash out, we’ll schedule an onsite appraisal visit to establish a fair market value of the house. We’ll then buy back your earned home equity-rewards at the appraised value of the house.

How is the fair market value determined on exit?

The fair market value of the home is determined by an independent, qualified third-party appraiser selected jointly by you and us.

How long can I live in ZeroDown home?

You can live in a ZeroDown home for up to five years. At the end of the five-year mark, you decide whether you want to purchase the home from us or cash out your equity-rewards.

Want to stick around longer? We’re working with our partners to provide extended and longer-term options for ZeroDown residents.

Want to check out sooner? Simply give us 90 days’ notice, and you’re free to go.

Can I make improvements to my home?

Absolutely. You can make any improvements or modifications to your home as you see fit. The quality of the home and any improvement to the home contributes to the home value which reflects positively on your equity-rewards when you cash out.

Can I sublet or sublease my home?

No, your ZeroDown home must be your primary residence, and you cannot sublet or sublease a portion or your entire home. However, you can do "hosted" short-term rentals like Airbnb in your home as long as you still occupy the house.

Qualifying For ZeroDown

How do I qualify for ZeroDown?

To apply, first sign up, we’ll invite you to qualify and link your bank account(s), which allows us to confirm your income and get a picture of your finances. We then work with you to determine what monthly payments you can afford, keeping in mind a number of factors including but not limited to your annual household income, debt obligations, financial history, and employment status. Getting a sense of your finances ultimately enables us to establish your home value budget. For example, if you can afford a $6,100 monthly payment, then the maximum cost of the home you choose is approximately $1,000,000.

Do I need a down payment to qualify?

Absolutely not. We didn’t choose the name “ZeroDown” for nothing!

What information do I need to provide to ZeroDown?

When you get qualified, we ask you for a few pieces of basic information and to link us to your bank and credit card account(s), which gives us an understanding of your finances. In addition, we ask for four references who can speak to your shining personal and professional attributes. If we happen to need any other information, we'll reach out to you.

How long does the qualification process take?

Once you sign up and link us to your bank account(s), it should take fewer than five minutes to provide you with your home value eligibility. Reference checks and final approval may take up to 48 hours, depending on your references’ availability.

Is there an application fee?

There is a one-time $500 program initiation fee, which will be applied towards your program fee when we submit an offer on your home. We will collect this from you upon the completion of the qualification process.

Costs & Fees

What are my upfront costs and when are they charged?

First - you get charged a program initiation fee of $500 when you successfully complete the qualification process.

You will be asked to pay a one-time flat program fee for ZeroDown equivalent to 1% of the home acquisition cost (minus the $500 you have paid as initiation fee) when we submit an offer to buy your home. We take care of all the other closing related costs of buying your home. That's it! No other costs, no hidden fees.

Here's an example listed for illustrative purposes — If we are buying a home for $1,000,000 - your one-time program fee would be $9,500 (1% of home acquisition cost - $10,000 minus the $500 you have already paid upfront). In comparison, if you were to buy a home through mortgage your total closing costs would be between $20,000 - $30,000 1, in addition to a down payment.

1 These are based of median closing costs for a buyer in the Bay Area.

What are the monthly costs of owning a ZeroDown home?

Your monthly costs on a ZeroDown home will depend on the value of the home you select. Each year, your monthly payment may increase by no more than 2-4% (to account for increases in property taxes, insurance and inflation) from the previous year’s monthly payment. This largely depends on where your home is located.

Do I need to pay property taxes or buy home insurance?

No. Your monthly payment to ZeroDown is inclusive of property taxes and insurance.

Do I need to pay the monthly HOA dues?

Yes. That said, we'll deduct it from your account long with your monthly payment and take care of making regular payments to the homeowners association.

Who is responsible for home maintenance costs?

As the resident and homeownership partner of the property, you are responsible for its maintenance. The same goes for any re-design or improvements that you want to make to the property. For large repairs, like roof replacements and HVAC breakdowns, ZeroDown will cover it.

Are my monthly payments tax deductible?

No, your monthly payments are not tax deductible.

Have more questions? Email us