Frequently Asked Questions

About ZeroDown

What is ZeroDown?

ZeroDown is creating a new pathway to homeownership 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 amount, building towards ownership each month. You earn purchase-credits purchase-credits represent a percentage of the home value and you earn them over time.
disclaimers
every month, much like stock options at your workplace.

ZeroDown blends the security of ownership with the flexibility of renting.

What are purchase-credits?

Purchase-Credits represent a percentage of the home value. You earn them over time.

How do I build towards 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.

Every month you earn purchase-credits that represent a percentage of your ZeroDown home's value. The purchase-credits you build over time have a two-year cliff, which means that as long as you live in a ZeroDown home (and are current on all payments) for at least two years, you can put it to use.
After two years, you can buy the home from us, using your purchase-credits toward a down payment, or move and cash out by redeeming your purchase-credits.

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.
  • Don't want to lock-in a sizeable portion of your net-worth in a home and would like to diversify your investments.

In which areas of the country does ZeroDown operate?

ZeroDown currently operates in the San Francisco Bay Area.

How does ZeroDown make money?

ZeroDown makes money via splitting buy side commissions with our partner agents as well as the one time flat program fee that we charge our customers.

The ZeroDown Guarantee

What happens if my home depreciates in value?

You are completely protected from any volatility in home prices by locking in the price at which you can cash out your purchase-credits. If home prices fell in value, you would still be able to cash out your earned purchase-credits at the original purchase price, unlike with a traditional mortgage, where your loan might be under water.

For example, if you bought a $1,000,000 home with ZeroDown. After 5 years, let's say that this home is worth $800,000. You'd still be able to cash out and redeem your purchase-credits at $1,000,000 and get $75,000 (7.5% purchase-credits earned over 5 years).

ZeroDown guarantees you downside protection.

What happens if my home appreciates in value?

You are completely protected from any volatility in home prices by locking in the price at which you can buy your home from us. If the home prices have had runaway appreciation and is now worth a whole lot more than you locked in price, you will still be able to buy the home from us at the predetermined purchase price which would be at a discount to market rate.

For example, if you bought a $1,000,000 home with ZeroDown, your pre-determined price at the end of year 5 is $1,313,166. After 5 years, let's say that this home is worth $1,600,000. You'd still be able to buy this home at $1,313,166 and apply your purchase-credits towards the purchase.

ZeroDown gives you unlimited upside. Everything over and above the locked in price is yours to keep.

ZeroDown vs Alternatives

How should I evaluate ZeroDown against other options?

ZeroDown represents a new approach to homeownership, developed with would-be homebuyers' interests. We strive to give you more leeway and control in the home buying 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 mortgage debt but instead earn home purchase-credits 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 suffer the entire loss. ZeroDown, on the other hand, provides downside protection. If a ZeroDown home depreciates in value, ZeroDown residents may elect not to buy the home and are still guaranteed to cash out and redeem their earned purchase-credits at the price at which the home was originally bought at.

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 towards ownership 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.

The ZeroDown Process

How does ZeroDown’s process work?

Working 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 and some townhouses, however, come with some home ownership association (HOA) provisions and we’ll go through those with you, should the need arise.

Who pays the closing costs?

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 works with home prices between $550,000 and $1,750,000.

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 purchase-credit schedule look like?

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

Duration Purchase-credits Earned
After 1 year(*) 0.00%
After 2 years 3.00%
After 3 years 4.50%
After 4 years 6.00%
After 5 years 7.50%
(*) Schedule has a cliff of 2 years / 24 months.

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, the terms of your option to purchase the home from us.

How many years do I have to live in a ZeroDown home before I earn my purchase-credits?

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

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

After two years, you can move out at any time and cash out your earned purchase-credits.

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 earned your purchase-credits and can buy your home.

Bonus: If you choose to buy your home, you receive bonus purchase-credits (2x additional purchase-credits) to help with your purchase. You can then get a conventional mortgage and buy the home from us at the predetermined 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 specify the predetermined purchase price at which you can buy the home from us any time between 2 and 5 years. This price is determined based on average home appreciation in that neighborhood and comparable homes over the last 10 years.

For example, if the acquisition cost of a home in San Jose is $1,000,000. The predetermined purchase price will be as follows:

When? Purchase Price Total (purchase-credits w/ bonus)
Between 25 and 36 months $1,177,584 2x purchase-credits
Between 37 and 48 months $1,243,538 2x purchase-credits
Between 49 and 60 months $1,313,166 2x purchase-credits

We have used ~5.6% year-over-year appreciation in this example. The historic 10 year year-over-year appreciation for San Jose is 6.5% and the historic 5 year year-over-year for San Jose is 11.5%. The numbers in this example are for illustrative purposes only. The actual numbers will depend on your home and neighborhood.

Can I cash out my purchase-credits when I leave?

Yes, you can receive a cash payment for your earned purchase-credits if you decide to leave after two years. We’ll then buy back your earned purchase-credits at the original purchase price of the home.

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 redeem your purchase-credits for cash.

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. We believe that the quality of the home and any improvement to the home contributes positively to the home value.

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 and qualify by linking 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 $6,899 monthly payment, then the maximum cost of the home you are eligible for is approximately $1,000,000.

Does qualifying for ZeroDown affect my credit score?

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

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. If we happen to need any other information, we'll reach out to you.

How long does the qualification process take?

Once you complete your qualification application, we will be in touch with you within 48 hours.

Is there an application fee?

No. However, there is a one-time flat program fee, when we make an offer on the home of your choice.

Costs & Fees

What are my upfront costs and when are they charged?

You will be asked to pay a one-time flat program fee to ZeroDown, when we make an offer* to buy the home of your choice. Once our offer is accepted, we take care of all the other closing related costs of buying your home. That's it! No other costs, no hidden fees, ever!

Here's an example listed for illustrative purposes — If we are buying a home for $1,000,000 - your total closing costs would be between $20,000 - $30,000 (based off bay area median value) via a traditional mortgage. Here's the breakdown of what the costs and program fee would be with ZeroDown:

Program Fee Monthly Costs
$10,000 $6,899
$25,000 $6,399
$50,000 $5,899
*The program fee is refunded if the offer is not accepted.

What are the monthly costs of owning a ZeroDown home?

Your monthly costs will depend on the value of the home you select and will not change as long as you live in your home. This is the only payment you’ll ever make to ZeroDown and we’ll take care of property taxes and home insurance. No hidden costs, no hidden fees, ever!

For a $1,000,000 single family home without HOA fees in the bay area -- using bay area median values to calculate property taxes and insurance, the monthly payment will be as follows:

Program Fee Monthly Costs
$10,000 $6,899
$25,000 $6,399
$50,000 $5,899

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 along with your monthly payment and take care of making regular payments to the homeowners association on your behalf.

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.