You may have seen the ads or signs while going through apartment listings or at large intersections: flashy ads advising you to “rent to own” a home as opposed to renting.
The costs appear reasonable. The pictures look good. But are rent-to-own homes licit?

Yes, but there are specific areas of these deals that buyers need me to know. It includes home upkeep, tricky contracts, and more.

Rent to own a home look like a normal home sales. Also, they’re an alternative to regular home loans. Both sellers and buyers can profit from these deals. But it’s important that everyone know the risks before starting.

What is rent to own and how it works?

It is a way of buying or selling something, in this case homes, over time. It gives the buyer a chance to become a home owner in the future.

Under this agreement, both parties agree to a sale. Eventually, the buyer decides whether the transaction will hold. Meanwhile, the buyer pays the seller, and a part of the payments decrease the money required to buy the home at a later date.

With a rent to own home deal, you can begin the homeownership process quickly, especially if you don’t qualify for a mortgage due to credit issues.

Should you rent to own?

To answer this question, let’s take a look at the cons and pros of rent to own homes.

The Pros

• Straightens your finances
Generally, you need a good credit report to get a mortgage loan. But if your credit is poor, renting to own a home can buy you time to sort your finances and get your credit in good standing. For more more info on credit see our credit repair article.

• Trial run
You can stay in the home before committing to buy it. What this means is, you can choose to walk away if the rental agreement is up. You’re not limited by a mortgage!

• Locked-in price
A rent-to-own deal contains an agreed price for the house. The seller cannot increase the price later in the future. So you need not worry about an increased price, even though the market improves.

The cons

• Nonrefundable
If you don’t want to buy the house anymore, you can void the settlement. But, you will lose any money that you put towards buying the house.

• Less regulated
Since rent-to-own home contracts aren’t as common as leases, government laws don’t apply often. Also, you’ll realize that you will have less protection in a dispute with a homeowner and lender.

• Hard to work with owners
Since you are dealing with owners directly you will need to be careful of the contracts you are signing. Some people could not be acting in good faith, although most will. You need to be aware that some contracts may contain clauses supporting a short-notice eviction if a buyer doesn’t pay on time. That is not necessarily a deal breaker, but something you should know if it applies to your deal.


These deals are complicated, and sellers and buyers can benefit greatly but could also get some surprises if you aren’t prepared.

If you want to consider rent to own a home, make sure you speak with your bank about financing before signing any documents with the seller.

Also, if you can’t get a mortgage in time, you can try to increase your credit score.

Want to find rent to own homes near you? Visit that link!