Information on How to Lease or Rent to Own a House

Information on How to Lease or Rent to Own a House
••• old home image by pearlguy from

When you lease- or rent-to-own a house, the owner of the home agrees to rent you the property while also giving you the option to purchase the home at a later date. Rent-to-own homes are similar to renting or buying a property in that there is a written contract that spells out the agreement between you and the current homeowner. Rent-to-own housing options can make buying a home more affordable than buying the home outright, as there are no immediate upfront costs such as a down payment and closing costs involved.

Find rent-to-own homes. Contact local real estate agents, search real estate websites, and scour real estate magazines and real estate sections of the local newspaper to find listings with homeowners that are willing to enter into a rent-to-own real estate agreement.

Choose a rent-to-own home. Visit each home that interests you and choose the home you’re interested in eventually buying. Evaluate the neighborhood where the home is located, schools that service the area, as well as how the house fits your needs and desires before deciding on the home.

Negotiate the terms. You can either work through a real estate agent, real estate attorney or directly with the owner of the home to negotiate the terms of the rent to own agreement. Work out with the owner how much your monthly rental payments will be, what portion of each payment will go towards the future down payment on the purchase of the home, the deadline for deciding that you want to exercise the option to buy the home, the final purchase price of the home, and the type of financing you will need to purchase the home (seller financing or a mortgage from a lending institution).

Draw up a contract. Have a real estate attorney draw up the formal rent-to-own contract that includes all of the negotiated terms. Both the renter and the seller have to agree to the terms by signing the contract.


  • Rent-to-own homes give you the added advantage of trying the home out before deciding to buy it.

    Depending on the agreement you have in writing with the seller, if you decide not to buy the property, you may receive some of the money you paid back. For example, if 10 percent of each monthly payment was part of your down payment for the future purchase, you may receive this money back if you don’t exercise your right to buy the home.

    Other agreements have an option fee--a fee that the renter pays to the homeowner upfront, which gives him the option to buy the home at the end of the rental agreement. Typically, this is a non-refundable fee, but it all depends on how the terms are spelled out in the agreement.