Saving enough to have a down payment on home is a large hurdle that many first time home buyers face. Many struggle to get over that obstacle. While there are banks and city programs now available to assist in the process of acquiring a down payment, it seems a startup company out of Seattle, Washington has taken a truly unique approach to helping potential buyers achieve homeownership.

Unlike traditional programs to assist with the down payment, the start up Loftium, does not require that the potential buyers live in the home for a certain time period, have a certain credit score, require a cap on income or the purchase price of the home, there's just one big requirement from them. That is you must list at least a room in your home on Air BnB for at least 1-3 years and give them a percentage of the earnings.


This unique company currently only provides down payment assistance in the greater Seattle area but has hope that with continuing success that they could expand nationally. Their service they say allows people to get into their dream home and helps them setup a passive income stream. Loftium provides their customers with up to $50,000 towards the down payment of a home the greater Seattle area. With such a large sum, the potential homebuyers are able to get into their new home with the necessary 20% down payment that keeps them from having to pay mortgage insurance.

While this does seem like a great concept and is proving to be extremely successfully in Seattle. There are a few potential wrinkles that could arise as Loftium continues to expand its services. Since they don’t currently have requirements on residency, one could easily use their services to buy a home and solely rent it on Air BnB. Which, in an area like New Orleans, could further the problem of out of state investors pushing local residents out in favor of profiting on short term rentals.


A second issue that comes to mind, which Loftium even addresses in their FAQ page on their website, is the matter of taxes for people who use their service. Currently Loftium provides the money for the down payment as a check directly to the home buyer. Which in turn is a large sum that would have to be reported on taxes as a source of income. Therefore new homebuyers would have to pay at tax time a large sum back to the government for receiving this assistance.


While there are a few issues Loftium or a company similar to them would have to iron out before this concept could spread nationally. It is an interesting take on addressing the issue of acquiring funds for a down payment. This startup is a first of its kind but with more and more millennials wanting to seek homeownership it is likely that finances will become more creative in ways to provide the younger adults of America with pathways to owning a home.


*Information for article taken partially from: The New Tribune

*To learn more about Loftium click here.