Renting to Own: How to Transform Rent Payments into a Mortgage

Family on the deck in beanbag chairs

Why pay rent toward someone else’s mortgage when you could put that cash toward your own? That’s exactly the thought behind renting to own agreements, which let you rent a property, apply a portion of your rent costs toward the mortgage and, eventually, purchase the home from the landlord after the lease comes to an end.

It’s a convenient, albeit complicated, route toward homeownership that gives you plenty of time to save for a down payment, improve your credit, and apply for a mortgage.

How Renting to Own Works

Renting to own is a unique animal, and it’s not an option for every property on the market. You’ll need to find a home that is specifically listed as a rent-to-own property, and these can be sparse, depending on your marketplace. Sites like and can help point you toward properties in your area.

Once you find a home you like, you’ll need to negotiate what’s called a lease option or a lease-to-own agreement with the landlord. You can enlist a real estate agent’s help in this process; they can help you iron out all the details of the agreement. Typically, a lease-to-own agreement will include:

  • Set timeframes for when you will rent and when you will be eligible to buy the home. This time period is traditionally from one to three years on most lease-to-own agreements.
  • Details on rent, including how much you’ll pay and what percentage will go toward your purchase of the home. You may be expected to pay a higher-than-average rent in exchange for a portion of your payment going toward the future purchase price.
  • The total option money you’ll need to pay, which essentially reserves your right to purchase the home at the end of the lease. This is a one-time, non-refundable fee in most cases.
  • Specifications as to how the purchase price will be calculated once you’re eligible to buy. The landlord may choose to lock in the sale price now, or they may stipulate that it be based on current market value at the time you buy.
  • Maintenance and care stipulations, detailing your responsibilities as a tenant. This could include insurance requirements, lawn care, home repairs, HOA fees, property taxes, and more.

Once your rental period is up, you will have the option to purchase the home, but you’re not obligated to. If the price is too high, you haven’t saved up enough for a down payment or you can’t qualify for a mortgage, you can continue renting or move to a new property as you see fit.

If you do want to buy the property, you’ll need to treat the situation like a traditional home buyer would. You’ll apply for a mortgage with the lender of your choice, get approved for a home loan, and then purchase the property from your landlord. Once closing day has come and gone, the home is yours.

How to Make the Best of Your Rent to Own Situation

Renting to own is a great choice if you don’t have a lot in savings or you can’t quite qualify for a mortgage just yet. But in order to come out on top (i.e., a homeowner!), you’ll need to make good use of your time as a tenant.

That means:

  • Save, save, save. You’re going to need a down payment once it’s time to buy, so make it a point to save a little every month you’re in the home. If you can, set up auto-drafts from your bank account so you don’t forget.
  • Work on improving your credit. If you want to qualify for a mortgage once your rental period is up, start working to boost your credit score now. Pay your bills on time, every time, and make an effort to pay down your debts, including credit cards, auto loans, student loans, and more.
  • Take care of your property. Remember, this home is going to be yours in a few months or years, so treat it with care. Water and fertilize the lawn, change out the air filters and have it sprayed and treated for pests when necessary. Treat the home as if it were your own.
  • Find the right lender early. Do your research and find a great mortgage lender early. Work with a loan officer to see what expectations and qualifications you’ll need to meet so that when the time comes, you’re more than eligible to apply.

Are you considering a rent to own situation? Get in touch with Embrace Home Loans today. We’ll help you understand what to expect as buyer down the line, and we’ll make sure you’re prepared to be the homeowner you’ve always dreamed of.

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Aly Yale

Aly J. Yale is a freelance writer focusing on real estate, mortgage, and the housing market. Her work has been featured in Forbes, Bankrate, The Motley Fool, Business Insider, The Balance, and more. Prior to freelancing, she served as an editor and reporter for The Dallas Morning News. She graduated from Texas Christian University's Bob Schieffer College of Communication with a major in radio-TV-film and news-editorial journalism. Connect with her at or on Twitter at @AlyJwriter.