Everything About Rent-To-Own Houses

Owning a house is the dream of our lifetime. However, the rising cost of living is making it harder and harder for people to get a house traditionally. This is when rent-to-own houses become really valuable, and I can’t stress enough how beneficial this rental type is to people’s lives. So, if you are interested in renting a rent-to-own house, but have no thorough understanding of it, in this post, I’m going to show you all the necessary information that will help you to have a good start with this rental type.

What you need to know about rent-to-buy houses
What you need to know about rent-to-buy houses

What Is The ​Rent-To-Own Program?

Essentially, a rent-to-own program (or rent-to-buy program) is a contract or agreement made between you – the renter – and the house owner, which allows you to rent a house for a period of time and gives you the option to buy the house before or at the end of the lease.

The rental and purchase prices are often discussed and agreed upon before signing documents. In most cases, you will be charged a slightly higher rental price than average, as a few percent of the rental price will be used as a deposit for purchasing the house in the future.

How The Program Works

Before signing the lease, which is the very final step, you (as a tenant) and the house owner will spend some time together discussing all the important components of a rent-to-own contract.

First of all, depending on the current condition of the house and the assessments of its future value, the purchase price will be determined. This is the amount you need to pay to completely own the house when the leasing contract runs out.

Next, since you start as a tenant, you still have to pay a monthly rental fee. When renting rent-to-own houses, the rental fees are often higher than normal, as a part of it will be deducted and applied to the purchase price.

To start a rent-to-own contract, you also have to pay an upfront amount called an Option fee. House owners often take about 2%-5% of the purchase price as the option fee. This payment is non-refundable, so if you end up not wanting to buy the house, you will lose the money.

After the agreed-upon rental period, usually from 3-5 years, you are allowed to pay the rest of the remaining purchase price and completely own the house.

Types of Rent-To-Own Contracts

This is where things can get a bit complicated for you if you are new to this type of rental. Not as simple as renting an apartment, there are actually 2 types of rent-to-own contracts, and they are slightly different in some terms. If you cannot point out the differences between them, chances are you will be stuck with some unwanted legal problems.

Types of Rent-To-Own Contracts


Lease-option is a more breathable contract that allows you to buy the house when the leasing contract ends.

The point here is that with this type of contract, you are not forced to buy the house. If you are not satisfied with the house and don’t want to buy it, the contract will just expire, and you do not take any responsibility for not buying the house.


With a lease-purchase contract, the freedom to choose whether or not to buy the house is no longer there. Buying the house at the end of the contract is now an obligation, not an option anymore. When you sign a lease-purchase contract, whether or not you can afford it, you are legally forced to buy the house.

Summing Up

Renting a rent-to-own house can be very beneficial in the long run. Nevertheless, this is indeed a rather complicated way of renting and buying a house, requiring a lot of thorough research and understanding of housing law. You should look for a reliable guide to renting houses and apartments and refer to experts’ recommendations before putting your name on the contract.