How Jubilee estimates your buying power

How the model works

A home has two parts: the land, and the improvements — the building standing on it. In a traditional purchase you finance both. With Jubilee, we buy the land and you buy the improvements, then pay us monthly ground rent for the use of the land.

Because your mortgage covers only the improvements, the amount you finance is smaller. A smaller loan means a smaller down payment in dollars and a smaller monthly principal-and-interest payment. The ground rent takes the place of the part of a conventional mortgage payment that would have financed the land.

You own your home, build equity in it, can refinance it, can sell at any time, and can buy the land from us whenever you are ready. You finance the home with an ordinary mortgage from a lender who works with our ground lease.

One thing worth being plain about: ground rent is a housing cost, not a loan payment. It does not build equity in the land, and it is not an installment toward buying the land later.

What a buying power estimate is — and is not

A buying power estimate is a planning number. It answers roughly one question: what price range is worth looking at?

It is not a preapproval, not an underwriting decision, not an offer of credit, and not a commitment to lend. Nobody has reviewed your credit report, your income documents, your other debts, or a specific property. Two people with the same income and savings can get very different real answers.

Treat it as a starting range rather than a budget. The number that actually governs your purchase comes from a conversation with a Jubilee advisor and a preapproval from a lender who works with our ground lease.

What the estimate uses

These are the inputs behind the number. We describe the market factors rather than publishing their values, because the values change and a stale number is worse than no number.

• Whether the home is somewhere we operate. See jubileehomes.com/where-we-operate for the current list.
• Your monthly housing budget, or your household income.
• The down payment you have available.
• The home price range you are looking at.
• Where the home is, which sets how much of its value sits in the land. The larger the land share, the more of the purchase Jubilee takes on and the smaller your mortgage.
• Mortgage rates, which set the cost of the loan on the home.
• The rate applied to the land, which comes from long-term interest rates rather than mortgage rates. This is also why the comparison is not fixed: when long-term rates rise relative to mortgage rates, the Jubilee advantage narrows.
• Property taxes and insurance where you are buying. You pay these on the whole property, land included, exactly as you would with a traditional purchase.

What a Jubilee advisor will also look at

The estimate does not use any of the following. The conversation that produces your real number does, which is a large part of why the two can differ.

• Your other debts and obligations — car payments, student loans, credit cards.
• Your income type, and how it is documented.
• Your savings beyond the down payment.
• Your buying timeline.

Why our estimate can be higher than a general affordability calculator

Our estimates model up to roughly half of your gross income going toward housing. That is a deliberately optimistic planning number, and it is more generous than the 28-to-36-percent rules of thumb a general mortgage calculator applies. It is also why our figure often comes out above what a generic affordability tool will tell you.

Our estimate also does not subtract your other obligations — car payments, student loans, credit cards — the way a lender’s underwriting will.

So read our number as a ceiling on what the structure can support, not a prediction of what you will be approved for. Your actual number depends on your full financial picture. Talk to a Jubilee advisor before you rely on it.

The lease terms behind the estimate

• Lease term: up to 99 years.
• Ground rent: set at the beginning of the agreement, then increases 3% each year. It is a fixed 3% annual increase — not a cap, and there is no flat introductory period.
• Down payment: your minimum is calculated from the improvements rather than the whole property, so in markets where land is a large share of value it is often below 2% of the purchase price.
• Buying the land: available at any point during the lease. The price is the greater of what Jubilee originally paid for the land and Jubilee’s proportional share of the property’s fair market value at the time you buy.
• Appreciation: you and Jubilee each fund a portion of the purchase at the outset and share in the property’s value in proportion to those portions. The split depends on the property, so any specific ratio quoted elsewhere is an illustration, not a fixed rule.

Who it works for

• Available in 11 states: California, Colorado, Connecticut, Florida, Massachusetts, New Jersey, Oregon, Texas, Utah, Virginia, Washington.
• Property types: single-family residences, fee-simple townhomes, and duplexes.
• Credit: generally a score above 680.
• Home values: up to $4 million.

How to get a real number

1. Start with the estimate calculator at jubileehomes.com/estimate to get a range.
2. Talk to a Jubilee advisor, who will look at your actual income, debts, and cash rather than an assumption about them.
3. Get preapproved with a lender who works with our ground lease.
4. Once you have a specific home in mind, we will put property-specific terms in writing.

You can reach us at (415) 301-4521 or through jubileehomes.com/contact.