Rent to Own Program Requirements

The main reason most rent to own programs or
lease options fail is they are inherently set up to. Many of the buyers
we work with need time to build up a down payment to close with
traditional financing, in fact, this is one of the key benefits of
renting to own.

While many sellers might offer first
month’s rent and a $1,000 option fee, to “rent to own”, or even “50%
rent credit”, these scams do not work and will leave you without the
real rent to own program requirements handled to buy your home.

 Minimum Down Payment Requirements

Minimally, you will need a 3.5% down payment ($7,000 on a $200,000
home) to qualify for a mortgage during the lease option term. 3.5% of
the home’s purchase price is the minimum down payment required the
Federal Housing Authority which insures 90% or more of the mortgages in
today’s lending climate. Minimum down payment requirements for most
conventional lenders are 5% to 10% of the home’s purchase price
($10,000 to $20,000 on a $200,000 home) but offer more attractive
interest rates and financing options.

Putting more money down ultimately increases your financing options
including owner financing. If you are able to put 10% of the home’s
purchase price down ($20,000 on a $200,000 home) in most cases you can
own your home from Day 1 and enjoy all of the tax benefits of owning
your own home as well as streamlined refinance options.

If you’re unable to put the minimum amount down today that’s OK. Rent
credits can be used to build your down payment up the 3.5% minimum
during the first year of your option term.

Credit Requirements and Maximum Option Term

Most buyers can qualify for traditional financing within 12 – 24 months
when established under a legitimate rent to own program. However, no
two buyers are alike which is why we go to great care to evaluate your
current credit and financing situation before finding the
perfect home for you.

By carefully evaluating your situation in advance you can be sure that
you’ll have ample time to work on your credit or other financing issues
keeping you from owning your own home.

If you are in a situation where you want or need an option term longer
than 24 months then putting more money down will “buy” the term you
need. As an example, it is not uncommon for owner financing contracts
to be for periods of 3-5 years before being required to refinance.

Find out answers to other common Rent to Own Questions.