Understand Terms: Each rent-to-own agreement varies, so carefully read and understand the terms.
Rent to Own is a general term that may mean
- Seller Financing
- Lease with Option to Buy
- Standard Lease - with Responsibility of Maintenance
- Portion of rent applied towards purchase
- Or other miscellaneous terms
Find Properties: Look for real estate listings that explicitly offer rent-to-own options. We do not have a list of these options. There are several companies that specialize in "Rent to Own" properties that we do not endorse.
Financial Preparation: We recommend preparing financially for the future purchase.
To purchase your own home the lender will consider the following...
- Steady Documented Income for two plus years. While your individual situation may vary, lenders often use the 28/36 rule. To determine how much housing debt a borrower can take on. This rule states that housing costs, including your mortgage payment, should not exceed 28% of your gross monthly income, and all debts combined should not exceed 36%.
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Credit Score 540+ (640 or higher is ideal)
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Down Payment - Even if we are able to get you down payment assistance, many of those programs require you have at least 1% of purchase price
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Savings - Since you would be responsible for maintenance of your new home, we recommend savings for possible maintenance and repairs
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Debt to Income Ratio - Lender want you to have around a 30% debt to income ratio before buying, and under 45% with your new mortgage. This is calculated by taking all of your income, divided by monthly debt.
We can assist with resources getting you ready to purchase a home.
