Is it possible to buy a house even if you have poor credit and no down payment? The answer is Yes! Rent-to-own homes are agreements between current and potential homeowners that let you rent a home before purchasing it. With rent-to-own apartments and houses, you promise to pay rent on a home until you buy it.
This lets you hold onto your dream house while you save and prepare to purchase. In some cases, your agreement can state that a portion of your rent payments will go towards the ultimate purchase payment. Here is how rent-to-own agreements work:
You pay a one-time payment that gives you the option to purchase the home at the end or near the end of the lease.
This amount can be as little as 1 percent of the purchase price.
You sign a lease-option or lease-purchase contract. The first gives you a choice to purchase the home, while the second requires you to buy it when the time comes.
You and the seller agree to a purchase price now or to determine the value at the time of the sale. You can potentially save money by locking in the price instead of gambling on the market price in the future.
Rent-to-own options give you a chance to prepare and practice for homeownership. The agreement can give you time to save and look for loans with great terms, such as government-backed mortgages.
Continue to the next slide to learn about these helpful government home loans, including FHA loans.