Rent-to-Own Homes
Understand How Rent-to-Own Works & How You Can Become a Homeowner
What Is Rent-to-Own?
Rent-to-own is a home agreement where you rent a
house for a set period
while having
the option and sometimes the obligation — to buy the
home before the lease ends.
Part of your monthly rent may be credited toward your future purchase.
How Rent-to-Own Works
1. You Choose a Home You Want to Own
Instead of applying for a mortgage right away, you
sign a rental
agreement
with the option to buy later.
2. You Sign Two Agreements
Most rent-to-own deals include:
- Lease Agreement — You rent the home normally.
- Option Agreement — You lock in the right to buy the home later.
3. You Pay an Option Fee
This is usually 1–5% of the home price.
It gives you
exclusive rights to buy the home at
the end of the lease.
This fee is often credited toward the purchase price.
4. Monthly Rent May Help You Buy the Home
A portion of each payment (called "rent credit") may go toward your future down payment.
5. You Work Toward Mortgage Approval
During the rental period, you can improve your credit, income, and savings to
qualify for a mortgage when you're ready to buy.
6. At the End of the Lease, You Decide
When your term ends, you can:
- Buy the home at the previously agreed-upon price.
- Walk away if the option contract allows (you lose the option fee).
Benefits of Rent-to-Own
- Live in the home you want while preparing to buy it.
- Lock in today’s purchase price.
- Build equity through rent credits.
- Easier transition for buyers who need time for credit or savings.
Is Rent-to-Own Right for You?
If you want to become a homeowner but need time to build credit or
increase income, rent-to-own can be a powerful pathway.
Always review your contract carefully and understand option fees,
purchase price, and maintenance responsibilities.
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