Hi Kristina,
Both previous answers explain rent to own perfectly.
However, I have had experience in owner finance and lease option transactions in our area. There are not as many on the market as there are just for sale homes. Of course foreclosures are out of the question. And some homeowners that can afford to do it don't think to advertise it.
Email me with your information (area, price range, number of beds and baths) and I will email you whatever comes up on my MLS under lease purchase, lease option, and owner finance. My email is angelasellshomes@gmail.com

each rent to own is set up individually between the buyer and the seller, so the terms change with each deal. The seller has to be comfortable that the buyer will be able to actually buy the home at the date that is established in the contract when the deal with struck (that may be 6 months down the road, or a year or 2 years, depending on what is agreed to). Part of the monthly rent may go toward the purchase or not, depending on how the terms of the deal are set, the security deposit may or may not become the earnest money. The building inspection and other "contingencies" are typically done when the deal is first done, BEFORE the buyer moves in. The title work and survey can be done then, or right before close (if done early, the title company will refresh them before close). during the period of the lease, the seller functions as a regular landlord with landlord responsibilities to take care of the property and the buyer has regular tenant responsibilities. It is a gamble on the part of the seller, since some buyers if they can't afford to buy now, never take the steps to be able to qualify later and hence can never actually buy and it can be difficult to then get them out of the home (tenant rights) so the sellers often write clauses into the contract that if the buyers are behind in the rent, they can be evicted and the sales contract becomes null and void.

Note that both a lease contract and a sales contract are done at the same time and both have deadlines that have to be followed in them

This is another way to use Lease-to-Own's. Since the days of NO-Doc Loans are gone for a while, you can get into a house with little money upfront and then lease the property (which you are serious about buying) for an extended period of time while you save up the typical 20% downpayment that most lenders prefer.

There are many people in your type situation:
Waiters
Bartenders
Self-employeed
People relocating their business which isn't up and running yet

As long as you can comfortably make the monthly payments (try to get some rent credits from the seller), and you enter into an agreement long enough to allow you to save up the money, and agree on a good purchase price.....you should be good-to-go.

***The Rent Credits along with the Option Consideration (payed at the beginning) can be looked at by the lender, when you decide to buy, as a downpayment.

Example:

you agree to a $200,000 purchase price
you agree to 4% upfront non-refundable option consideraton (which will be credited at time of purchase)
you agree to $1600 monthly payments ($300/mo of which will be Rent Credits at the time you decide to buy)
you agree to a 36 month term
------------------------------------------------
$300 x 36 months = $10,800 Rent Credit
+ $ 8,000 Option Money
---------------------------------
= $ 18,800 possible downpayment

Our associates help people in your situation all the time get into homes while giving them time to work on their credit or save up for the downpayment. If you have any questions (which are not already answered on our website), we'd be happy to answer them for you.

Darin
HHI Investing