Rent-to-Own Frequently Asked Questions (FAQ)

There are two components of a Rent-To-Own agreement: 1) a Standard Lease that outlines the monthly rent payment, and other customary lease terms, and 2) the Purchase Option, which gives the Buyer the right to purchase the property at a predetermined price provided the Buyer has complied with the terms of the agreement. For further detail on the specific components of the transaction, please visit our Transaction Overview Page.

Buyers and Sellers have been entering into Rent-To-Own transactions for decades. Recent housing market conditions have, however, put the spotlight on Rent-To-Own transactions. The number of Buyers and Sellers will continue to grow rapidly as the public become more aware of the benefits of the concept, for both sellers and buyers.

Lease option transactions are also known as rent to own, or rent to buy transactions. In a lease option, the landlord-seller leases the home to the tenant-buyer and the tenant-buyer has the option to purchase the home for a pre-determined price at any point prior to the end of the lease. The main components of a lease option transaction are the lease term, the purchase price, the down payment, and the rent credit.

Lease purchase transactions are similar to lease options; however, rather than granting the tenant-buyer the option to purchase the home, lease purchases contractually obligate the tenant-buyer to purchase the home.

Owner financing agreements and land contracts have similar payment schedules to that of lease options and lease purchases; however, these agreements enable the buyer to purchase the home and obtain title at the beginning of the transaction. The seller, instead of receiving a large cash payment at the time of purchase, as he/she would in a conventional sale, serves as a lender for the remainder of the agreement, and collects monthly financing payments from the buyer. When the owner financing agreement or land contract expires, the buyer obtains third-party mortgage financing and fully repays the seller loan.

Rent-To-Own transactions have remained a small part of the overall real estate market. In the past, many of these transactions lacked transparency, and often left unsophisticated buyers unable to purchase the home at the end of the lease term. Additionally, there has never before existed a standardized transaction structure and legal agreement to ensure that these deals are fair, transparent, and simple for Buyers, Sellers, and Agents to complete. At we aim to level the playing field by equipping both sites with relevant information and a transparent process.

The sellers of Rent-To-Own real estate include homeowners, real estate agents, property managers, and real estate investors. You must be an owner or a legal representative of an owner to market a home to our buyers. Houses listed on Housinglist have ranged in price from less than $100,000 to greater than $2,000,000. Besides rent-to-own homes, we not also feature six other types of listings: bank foreclosures, pre-foreclosures, short sales, HUD / government foreclosures, auctions and owner financed / for sale by owner. For more detail on all property types, please check out our

Homes Sales Types overview.

Housinglist strives to increase the nationwide pool of qualified homebuyers. We are committed to the belief that we can help anyone fulfill their dream of becoming a homeowner. The most typical Rent-to-Own candidate is someone who wants to improve his or her financial profile over the term of a lease, with the goal of purchasing the home at the end of the rental period.

Potential buyers have historically included the following:

  • Families who want to improve their financial profile (i.e. save more money and restore any credit problems) over the course of a lease in order to obtain an affordable mortgage at the end of the lease
  • Families with impaired credit who are presently unable to qualify for suitable mortgage rates due to credit issues
  • Families who want to try out a home, neighborhood, or school district before committing to it long-term
  • Families who are tired of renting and want to take positive steps towards home ownership
  • Real estate investors

Buyer benefits:

  • Opportunity to Own Your Dream Home: You have the ability to own your own home as you build up equity and fix any potential credit problems.
  • Prepare for Home Ownership: Take your time and learn how to properly care for a house as you move towards your goal of home ownership.
  • Turn Your Rent Into An Investment: Both a portion of your initial down payment and your monthly rent will be credited to your purchase price.
  • Profit from Appreciation: In a Rent To Own agreement the purchase price is fixed, giving you the opportunity to make equity gains in the midst of growing real estate markets.
  • Credit Improvement Specialists Available: Our partner credit experts can help you build your credit to the point of making a purchase at the end of your lease.
  • Upfront Timing: The timing for moving into a Rent to Own home can be much shorter than purchasing a home should you choose to exercise your option.
  • Maintain Your Flexibility: Rent To Own gives you the flexibility to walk away from the property at the end of your lease term, should you decide you don't want to make the purchase.
  • Potential to Own Independent of Your Credit History: Whether you've had late payments, a bankruptcy or simply haven't had enough time to build up your credit, a Rent To Own home may enable you to build equity and repair credit while renting to own your home.

Seller benefits

  • Downside Protection: If your buyer should fail to procure a mortgage loan, or waive the purchase option at the maturity of the lease term, you retain the deposit, rent and all accumulated equity. 
  • Rent Premium: Rent to own landlords typically collect a rental rate premium in exchange for offering a purchase option.
  • Tax Friendly: Avoid short-term capital gains with a "fix and flip" strategy by renting to own the property to a tenant, just be sure the lease extends more than a year from your date of purchase.
  • Responsible Renters: Your tenant has a large personal equity stake in the home you are selling, and as a result will treat your property just like his own.
  • No Traditional Real Estate Transaction Fees: Avoid all real estate commissions by selling your home to your tenant without using an agent.

No. The seller will grant you the option to purchase the home, but the decision to purchase is entirely up to you.

A "rent credit" is the portion of the monthly rent that is credited towards the final payment due at the end of the lease on a Rent-To-Own home. The monthly rent credit payments are typically retained by the seller until the buyer exercises her or his purchase option. Savvy tenant-buyers often insist on using an escrow account to protect their investment against a Seller default.

Your down payment and monthly rent credits are non-refundable. If you do not execute your purchase option, this money will not be returned to you. This is one of the critical risks of rent to own transactions, and it is why tenants should be cautious before entering one.

During the lease period, the Seller remains responsible for the mortgage payments, homeowner insurance and property taxes.

Although it is hard to find reliable statistics on the rent to own real estate industry, most experts would agree that purchase rates are very low, likely below 10%. The fact is most tenants are unable to secure a home loan before the end of the rental period. This is generally the result of three primary causes:

  • Because landlords collect a large upfront deposit and a monthly rent premium, they are well protected in the event the tenant chooses not to purchase the home. As a result, they rarely do a sufficient job of screening prospective tenant-buyers for strong financial profiles
  • Tenants are often too optimistic about their ability to improve their FICO score or accumulate savings during the rental period
  • Tenants are reluctant to seek professional assistance to achieve their financial goals

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