Rent To Own Program requirements
The main reason most rent to own programs or lease options fail is they are inherently set up to. Many of the buyers we work with need time to build up a down payment to close with traditional financing, in fact, this is one of the key benefits of renting to own.While many sellers might offer first month’s rent and a $1,000 option fee, to “rent to own”, or even “50% rent credit”, these scams do not work and will leave you without the real rent to own program requirements needed to buy your home.
Minimum Down Payment Requirements
Minimally, you will need a 3.5% down payment ($7,000 on a $200,000 home) to qualify for a mortgage during the lease option term. (Keep in mind this can sometimes be built up over the first year of the term of the option)The Federal Housing Authority which insures 90% or more of the mortgages in today’s lending climate, requires this as a minimum down payment to qualify. Minimum down payment requirements for most conventional lenders are 5% to 10% of the home’s purchase price ($10,000 to $20,000 on a $200,000 home) Putting more money down ultimately increases your financing options such as seller or owner financing. If you are able to put 10% of the home’s purchase price down ... in most cases you can own your home from Day 1 and enjoy all of the tax benefits of home ownership.
If you’re unable to put the minimum amount down today that’s OK. Rent credits can be used to build your down payment up the 3.5% minimum during the first year of your option term.
Credit Requirements And Maximum option Term
Most buyers can qualify for traditional financing within 12 – 24 months when established under a legitimate rent to own program. However, no two buyers are alike which is why we go to great care to evaluate your current credit and financing situation before finding the perfect home for you.By carefully evaluating your situation in advance you can be sure that you’ll have ample time to work on your credit or other financing issues keeping you from owning your own home.
If you are in a situation where you want or need an option term longer than 24 months then putting more money down will “buy” the term you need. As an example, it is not uncommon for owner financing contracts to be for periods of 3-5 years before being required to refinance.
