The Non-Traditional Way


If you are in a situation where you do not qualify for a traditional mortgage, but would like to purchase a home nonetheless, renting to own may be a great option for you. Those who do not have enough money for a down payment or have credit scores too low to qualify for a bank-financed mortgage are still able to become homeowners through the process of rent to own.



Though you won’t need as large a down payment as you would with a traditional mortgage, you will still likely need to put down a deposit (much the same as you would if you were renting an apartment). The deposit is typically a percentage of the price of the home and will go toward its final purchase. You will likely lose this deposit if you do not purchase the house at the end of the contract.

Monthly payments are determined by the deal. You will pay rent each month (just as you would with a rental property), but you will pay an additional amount that will go toward the purchase price, which is the amount you still owe on your home (after the deposit is deducted from the total price). You are paying down the final cost of the home by making these monthly payments.


Time Frame

As with the amount you pay monthly, the length of time you rent will depend upon the contract. Rent is usually paid for a period of one to three years, after which you will be given the option of purchasing the home for the agreed upon price.

At this point, you will have paid money toward the total price of the home; this puts you in a much better position to buy it using a traditional mortgage. If you are still unable to secure a mortgage, the seller may be willing to renegotiate the contract; if not, you will lose the money you have put toward purchasing the home and will need to move.


Another Option

If you are unsure of whether or not you will be able to buy the home at the end of the contract, another option available to you is a Lease Option contract. This option is very similar to leasing a car; you make payments during the leasing period, then, at the end of the lease period, you have the option to buy the property, but are not bound to do so. You will, however, waive any deposit as well as all payments you have made.



To decide if renting to own a home is right for you, take a couple of things into consideration:

1.  Why do you not qualify for a traditional mortgage? If your credit problems are a temporary thing perhaps due to a recent job loss or similar catastrophe renting to own is likely a good option and may even help you repair your credit to a certain extent. If, however, you have a chronic problem with bad credit, it would be best to work on repairing and maintaining your credit prior to considering buying a home.

2.  Why do you not have enough money for a down payment? Take a good look at the math; if renting helps you save money, figure out if you can budget an amount to set aside for a down payment in a few years.


Finding a Rent to Own Property

Real estate agents are usually only interested in selling homes outright so they can collect a commission on the sale, so finding a rent to own home may take a bit of work on your part.


You may benefit from working with a house investor like B&G Real Estate Consultants a company that specializes in helping temporarily damaged home buyers buy and sell homes.

Contact us today!