Lease to Own Home Purchase Agreement

If you`re looking to purchase a home but aren`t quite ready to take the leap into a traditional mortgage, a lease-to-own home purchase agreement may be the solution for you. This type of agreement allows you to rent a property for a set period of time with the option to buy the home at the end of the lease term.

But what exactly does a lease-to-own home purchase agreement entail? Let`s dive into the details.

How it works:

First, you`ll need to find a landlord or property owner who is willing to enter into a lease-to-own agreement. Once you find a property you`re interested in, you`ll sign a lease agreement that typically lasts anywhere from one to three years.

During this time, you`ll pay monthly rent as you would with any other rental property. However, a portion of your rent payments will go towards the eventual purchase of the home. This is known as a “rent credit,” and it acts as a down payment towards the purchase price of the property.

At the end of the lease term, you`ll have the option to purchase the home for the agreed-upon price. If you choose to exercise this option, the rent credits you`ve accumulated will be applied to the purchase price of the home.


There are several benefits to entering into a lease-to-own agreement. For starters, it gives you the opportunity to build up equity in the home while you`re still renting. This can be especially helpful if you`re not able to secure a mortgage right away.

Additionally, a lease-to-own agreement allows you to test out the property and the surrounding neighborhood before committing to a purchase. If you decide that the home isn`t right for you, you can simply walk away at the end of the lease term without any financial penalty.


While there are certainly advantages to a lease-to-own agreement, there are also some potential downsides to consider. For example, if you end up deciding not to purchase the home at the end of the lease term, you`ll likely forfeit any rent credits you`ve accumulated. This means you`ll essentially be paying more in rent than you would with a traditional rental property.

Additionally, if the housing market takes a downturn during your lease period, you may end up overpaying for the home. This is because the purchase price is typically agreed upon at the beginning of the lease term, and it may not reflect any changes in the housing market that occur during the lease period.

Overall, a lease-to-own home purchase agreement can be a great option for those who aren`t yet ready for a traditional mortgage. Just be sure to carefully weigh the pros and cons before entering into any agreements, and make sure you fully understand the terms of the lease before signing on the dotted line.