As the cost of living in the Seattle area continues to rise, owning a home is starting to seem impossible.

Loftium, a startup recently founded by young entrepreneurs Yifan Zhang and Adam Stelle, hopes to change that. Since September 2017, the company has been providing aspiring homeowners up to $50,000 for a down payment on a house.

The Seattle-based startup just launched down payments on homes in Bothell last month.

The catch? Buyers must agree to list a spare bedroom on Airbnb — a company that offers short-term and vacation rentals — for one to three years and share some of the profits with Loftium.

The idea came to Zhang two summers ago after buying a home with her husband. Once they moved in, they began listing a spare room on Airbnb to earn extra money.

“I was amazed by the income payment from one bedroom,” Zhang said.

Each month, Zhang found that she and her husband generated enough money to pay for their mortgage and other expenses. And that’s when the idea for Loftium’s business model started to take shape.

Development started as far back as fall 2016 with Stelle, who Zhang had met a few months earlier. Stelle is the former COO of Startup Weekend and is an entrepreneur-in-residence at Pioneer Square Labs.

Loftium officially launched September 2017 after it received mortgage regulator approval to issue down payments.

“Getting that approval has been huge,” Zhang said.

In the months since its launch, Loftium has served several individuals in the Seattle area. It has also been profiled by publications including the New York Times and Geek Wire.

The business primarily targets younger buyers. Typically, Loftium provides a down payment that correlates to how much revenue they predict the room can generate in a year, taking the buyer’s income into consideration, too.

Homeowners are also given the opportunity to mark off eight days of the year during which the room will not be available. Zhang said homeowners are not penalized if the listed space under performs, adding that Loftium is willing to help prepare rooms for potential customers.

“We’re actually providing free furniture,” she said, adding that Loftium will also provide linens and supplies if necessary.

If a homeowner wishes to back out of the deal before the contract ends, they must pay their share of the remaining nights, along with a small penalty fee. If this doesn’t happen, the contract gives Loftium the ability to place a second lien on the property.

“They’re not locked in,” Zhang said.

In the months since the startup’s launch, homeowners working with Loftium have expressed satisfaction.

Husband and wife Robert Allaway and Rachel Forcino, both of whom are in their 20s, learned about Loftium through their Redfin agent. Allaway said he and his wife were already considering designating a portion of their home for Airbnb and putting down more money to reduce their mortgage.

“Loftium let us do both those things,” he said.

Since becoming involved with the startup, Allaway and Forcino have become “super hosts” on Airbnb, which is a title given to listers who have provided guests with positive and memorable rooming experiences. Allaway said he and his wife have gotten to meet several interesting people as a result and that it’s been great getting to know repeat guests.

He also relishes how easy Loftium is to work with.

“Loftium has helped us reduce the burden of Airbnb-ing by providing tools that automate a lot of the necessary communication,” Allaway said. “The agreement also allows us to Airbnb a second room outside of the Loftium agreement and that’s been a nice additional source of income.”

As of right now, lenders working with Loftium are only able to apply down payments to mortgages financed by Umpqua bank, though Zhang and Stelle intend to partner with a wider range of lenders and rental services in the future.

Zhang is also looking to expand its reach in the upcoming months. But primarily, Zhang hopes Loftium becomes a standard for prospective homeowners.

“We’re trying to make it as easy as possible,” she said.