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What you need to know about rent-to-own home deals

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You dream about buying a house, but you can’t — at least not yet. Maybe you don’t have the money for a down payment, or you’ve had problems with your credit. But what if someone offered you a chance to eventually own the house you’re renting?

You might be told it’s a chance to “stop throwing money away on rent.” But we’ve heard that many people who thought these deals were a path to owning a home watched their dreams disappear instead.

In a rent-to-own deal, the person or company that owns a home agrees to sell it to you in the future for a specific price. Rent you pay now is counted toward your future down payment on the house. But these deals can be risky — and even flat-out scams. Sometimes people find out:

  • the “seller” doesn’t really own the property
  • the owner hasn’t paid property taxes
  • the house is in terrible shape, or has issues like lead or asbestos
  • promised fixes aren’t made after a contract is signed
  • the house is getting foreclosed on

Even with legitimate rent-to-own deals, the devil is in the details. You might have to pay upfront fees and higher monthly payments than if you were renting. In some deals, if you miss a payment, the deal is off. If you do make it to the end, you might find you’re locked into paying more than the home is now worth, or that you can’t qualify for a mortgage to finish paying off the house.

Consider saving up your money and working on repairing your credit to buy a house down the road. For more on buying home, take a look at our Homes and Mortgages articles.


Isn't this issue within the jurisdiction of the FTC Unfair, dective acts and practices? I appreciate the pointers but do your job. Sometimes it take years for victims to discover they are actual victims due to TILA violations. It doesn't help either when the FTC constructs its complaint portal making it difficult for complainants to complete when trying to articulate the frauds and companies involved.

I would like to know if they have a list anywhere that offers rent to own property

I would think that more legitimate Rent to Own deals would more likely only include a smaller amount toward the purchase price would apply. If the rent were $1400 and only $200 were to go for the purchase it would sound more credible. But it could still be a fraud. A search of the county tax assessor's records may be advisable to determine the owners true identity.

Thanks for the information on this topic. I have always thought this was very risky. I know someone who got locked into this type of contract and they lost three years of money. The person own the house had it tied up with two mortgages. I do not like this type of own to rent. i would rather just rent.

Absolutely a bad idea to do rent to own unless you know the people. You make the deal out of excitement of the opportunity to own your own home. If you make a deal with your landlord to do a rent to own have them put all the information on the table because it's easy to get sucked in when you don't think about what you are really doing with your future. I have been asked by many clients if this is something they should do and I always tell them No. It is always best to protect yourself against these types of deals. Do yourself a favor and work on your credit it's a much better deal to fix your credit issues and talk with your lender about down payment assistance programs they are legal and protected and then you won't have the stress of whether you made the right choice. Also before signing with your lender make sure they explain everything to you, ask questions if you don't understand what they are saying. Always let your lender know what kind of payment your looking for because truly only you really know what you can afford to pay every month. Being approved for a home way out of your affordability is a stress you don't want. No one needs to get locked into something that later they end up being foreclosed on losing everything you worked so hard for... Do your research, and prepare for your future.

And the value of the home will very likely be different from the agreed-upon price, which means that the buyer may need more to purchase the home than originally thought.

Not the case in California.
Prices always on the rise.

Thank you for this article. I have often thought many of these rent to own offers were hidden scams. It's good you brought this out in the open for closer inspection. Your article is appreciated. Thank you!

Thank you for this info...I recently had someone try to talk me into a rent to own. I was not looking and he approached me in a class room environment.

Great advice. Thank you for the service you are providing.

Well, all of these opinions are indeed substantial but couldn't someone get a rent to own contract that will protect their interests? I mean we have good contracts for many other things. A lot of would be buyers want to rent then own. But I think it locks up the seller and buyer who in the future may not even want the original contract. So it should be open to change and if they don't buy then the proceeds of a down payment go back to the landlord end of deal.

Rent-to-own should be handled in the same way buying another house outright. If people would go through a lawyer and use some common sense they could figure things out earlier avoid a lot of these pitfalls

If the price is agreed upon (in the contract) and the value of the home goes up, the buyer will get a great deal. The risk isn't all on the buyer. The seller is taking a risk too.

Thank you for this information. I wondered whether rent-to-own was real. Now I know what to do and not get involved with this type of situation.

I am in the middle of a Rent to Own SCAM. I started getting very suspicious upon signing the contact, but it was too late. I informed my landlord I was moving and she put the house up for sale,so I had to go through with it, or my daughter and I would have been homeless. I had given her ( seller, on rent to own) a substantial down pmt, plus put several 1000s into renovations and such bc the house was trashed...but had decent potential,so I jumped on it. I later found out that she had enteted into a contact w Seda-Cog, which states that she had to reside here for 5 yrs and was not allowed to sell or rent the property out. Also was made aware by a 3rd party that her mortgage isn't being paid on the house we are in. I withheld last month's rent and told her I need to see proof that the mortgage is being paid before I will resume anymore pmts to her. She slapped me w an eviction threat/notice, but I'm hoping I can get her for Fraud!

You may want to contact the Attorney General in your state.

we want to enter a rent to own with a family member but were told if the lender found out that they could come after us for remainder of the mortgage, is this true?

You may want to read these FTC articles about Homes and Mortgages  do research about mortgages online, or talk with lenders in your state.

how do we go about doing this rent to own a home? can u tell me about if we can rent to buy a home with the rent being 800 dallors

Rent to Own Ads don’t tell you that it’s not available in all areas. Long Island for example does not have a Rent to Oen program. Also, these Rent to Own Ads don’t tell you that you have to join Lexington Law to fix your credit. I think they are working with Lexington Law to increase their business. Lexington Law does not really help and they are expensive.

Finally finding forums and threads now answering our questions about "RentBeforeOwning" and "RentToOwn" Websites and Lexington Law Credit Repair. We are going through a Retaliation Eviction and in looking for a Rental to move to, having been previous homeowners, saw Rent-to-Own options. After about 30 years of home ownership our credit rating and all went bad when husband was injured and disabled. Thought this sounded too good to be true and have paid Lexington Law some money for "credit repair" but they do nothing...Now sadly we understand why and time & money have been wasted. Guess "the other shoe fell" so to speak...

I was in a rent to own and lost thousands of dollars. Please do not enter into this type of contract. You pay the owner and they don't pay the mortgage and you have no way of knowing. Lexington Law is a joke all they do is take your money and send out form letters to the credit bureaus.. you can do this. I was paying $79.00 a month and no real changes as they promised. I also had trouble getting them to stop the automatic payment withdrawals. They are a scam hooked up with rent to own. They hype you up telling you they can help you get your credit repaired by contesting negative items from your credit report.. some items (bankruptcy, leins, etc) can't be deleted with a letter. Pay your bills on time, keep your credit usage low.. address what you can dispute on your credit report yourself. It will take a minute but you can qualify for a house. I did.. took 2 years..

I know a couple people that have done this even contract to deed sales I can't buy a house right now because I am an independent contractor as of last month so I want to find a rent to own or contract where we can move and I can keep working at home until I can get approved to buy surely as long as you have it go through a lawyer it can be ok but I don't I just know a couple have done this and its been good for them.

Thank you, because i was sp desperate in owning a home again after bad credit i almost agreed to one of these companies! But i thought maube if i look online i can find out more info. Because if it sounds to good to be true, chances are it is!!! Thank you, Nancy S.

Sellers BEWARE
It seemed to good to be true that they wanted to pay more for my house than I was.
It may be a scam, but why?

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