Buying a home can be an exciting time in your life, but taking the plunge can be nerve-racking. While you want to start building equity with your own place, you also worry about the added expenses of owning a home like a mortgage, significant repairs, extra bills, etc.

All of these things can make transitioning from renting to owning a challenging one. Lucky for you, you have options.

Instead of struggling between the idea of renting or buying, you can combine the best of both worlds with a rent-to-own home. Keep reading to see how it works and how it might just be the perfect solution for you.

What Is a Rent-To-Own Home?

A rent-to-own home is a deal you have with the homeowner that allows you to rent the property for a certain period, with the option to purchase it at the end of the contract.

With this type of agreement, you will pay a premium on your rent payments, and the extra money will go towards your down payment at the end of your lease. If you decide not to buy the home at the end of the lease, you will forfeit the extra money you put down on rent.

With some agreements, there will be an “option fee” that you may have to pay to the owner for holding the property for you. This fee is typically between 2-7% of the market value of the home.


There are many advantages of a rent-to-own home, and it all depends on your current life situation to decide if it’s right for you. Here are a few of the pros of this kind of purchase.

Take the Home for a Spin

One of the best things about this type of agreement is that you can “try before you buy” to ensure that you truly want the home.

Your rent payments will be a little higher than usual, but it can be a small price to pay compared to a large mortgage and all the responsibilities that come with ownership.

Save for a Down Payment

We all know how hard it can be to set aside money for a big purchase. With a rent-to-own deal, you are forced to save for your down payment by way of your increased rent payments.

You know upfront what your monthly rent will be, so you can budget while saving for the purchase at the same time.

No Major Repair Expenses

In a rent-to-own agreement, it’s common to work out a deal with the owner regarding repair expenses. This will usually consist of you taking care of the minor stuff like a hole in the drywall or a clogged drain, while your landlord will foot the bill on anything significant like a roof replacement.


While there’s a lot to like about a rent-to-own agreement, there can be some cons for some people. Here are a few things to think about before you dive in.

Losing the Extra Rent Money

The major con of this kind of arrangement is that you will not be able to recoup the extra money you paid on rent if you decide not to purchase the home at the end of the lease.

Depending on how long the lease agreement is, this can end up being a significant amount of money that you won’t get back.

Lose the Home If You Can’t Get a Loan

If you cannot get a loan for the home by the time your agreement is up, the owner has the right to give you the boot and either sell the house or rent it to someone else.

That’s why it’s always a good idea to start looking into loans as soon as you sign your lease agreement.

Types of Contracts

There are typically two types of contracts for a rent-to-own arrangement, and it’s essential to understand the differences before you sign on the dotted line.


With a lease-purchase agreement, you are obligated to buy the home at the end of the lease, whether you can afford it or not. You will agree on a purchase price upfront with the seller when you sign your lease and will be expected to follow through at the end of your term.

This arrangement can be a riskier option, and the seller may even take legal action if you don’t buy the home.


With a lease-option agreement, you are required to pay the owner an option fee at the beginning of the deal that is usually 2-7% of the home’s market value.

Doing so gives you the freedom to walk away at the end of the lease if you decide not to go forward with purchasing the property.

Is a Rent-To-Own Home Right for You?

A rent-to-own home can be an excellent option if you are looking to improve your credit score, can’t currently afford a down payment, or need help saving money.

Once you decide on a rent price in your budget, you can just forget about it and begin saving for your down payment without even thinking about it.

By the time your lease is over, not only will you have a portion of your down payment, but your credit score will probably have improved as well, allowing better loan options from lenders.

Taking the Next Step

A quick Google search of “rent-to-own homes near me” will provide you with plenty of options to get started. You’ll likely be able to choose from a rent-to-own home, condo, and even rent-to-own mobile homes.

It’s always nice to have a little help along the way with any type of decision this big. Contact Home Buyer Creators today to talk to our experienced industry professionals that will walk you through the process and help find listings near you.