A Homebuyer’s Ultimate Guide to Rent-to-Own Homes: Everything You Need to Know in 2023

Rent-to-own homes are a popular real estate option, especially for people who have been renting for years. These homes let buyers take ownership without a cash deposit, but rental payments are required. And as rent-to-own popularity continues to rise, learning as much as possible about the process can help you make a smart decision.

What Is A Rent-To-Own Home?

A rent-to-own house or apartment is an agreement between you and the seller (renter) that allows you to own the property at the end of the lease. Often no repairs or maintenance are required, and you can choose the move-in date. It is an alternative to purchasing a traditional home. The home comes with a lease or rental agreement that acts as security for your monthly payments. Rent-to-own homes are a great alternative for people who cannot qualify for a traditional loan. A rent-to-own home is often less expensive than a traditional home. Your rent-to-own home payment is interest only. Rent-to-own homes typically come in 12 months or 24 months.

How does It work?

Renting to own is an excellent way to ensure you have the money you need for a down payment and closing costs. Depending on your credit, you may be able to qualify for a low-down payment or no down payment. Landlords must disclose information about the condition of the unit and the rent to prospective buyers. You can usually get a better interest rate on a lease option than you can with a conventional mortgage. Rent-to-own homes generally are purchased through a private party.

Rent-to-own homes, also known as rent-to-own properties or rent-to-own houses are becoming increasingly popular options for homebuyers. While a traditional home buyer purchases a home, rents it for a certain amount of time, and pays cash for the full price of the home, a rent-to-own home allows a buyer to give a deposit, then make monthly payments that include rent and interest. Once the rental term has ended, the buyer receives title to the property.

Pros And Cons of Renting To Own


  • Begin saving for a down payment but also get you into the home of your dreams without tying you to a long-term contract
  • Meet needs such as extra bedrooms, space for a growing family
  • Renting to own means, you own the house
  • You will get a tax break
  • You can move in immediately
  • You can get repairs done easily
  • You can get a new tenant if needed and get rental income


  • Paying 3 to 5 times what the house is worth means you will need a large down payment.
  • You will have to mortgage the house
  • You do not have a guaranteed lease
  • No immediate ownership of the property
  • No right to sell the home until you have the complete ownership


  • Check your credit report and score
  • Make a budget
  • Research the house before you rent it

How To Rent to Own?

When renting to own a house:

  • Be sure to check with the bank and landlord for a list of acceptable tenants.
  • Make sure to get a written contract
  • Make sure to make monthly payments on time
  • Make sure to give it back to the owner at the specified date
  • Make sure to not make late payments
  • Make sure to choose the right property
  • Make sure to choose a good real estate agent
  • Make sure to not sign any contract without reading everything
  • Make sure to have a pre-approval letter from your mortgage lender
  • Make sure to not change the terms of the contract

Because rent-to-own homes give buyers a risk-free alternative to mortgages, they’re ideal for prospective homeowners who can’t afford a down payment. For those looking to avoid auction- or bank-owned properties, they’re also worth considering, given that such homes often carry hefty repair costs and threats of foreclosure.