Question Details

Amanda Brand, Home Buyer in Normandy, TN

im wanting to rent to own, how hard is it to get approved for a house to rent then eventually buy?

Asked by Amanda Brand, Normandy, TN Wed Feb 6, 2013

im currently a marine and going home to tn soon, looking for a house.

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Good morning Amanda,

First, please let me say, "THANK YOU!" for your Service to our Nation!

Second, find a Local Mortgage Banker in the area of Tennessee where you wish to live and see if you qualify using your Veteran's Benefits for 100% VA Guaranteed Mortgage Financing to BUY a home now instead of renting. You can get a list of Local VA Approved Mortgage Bankers on the VA website here: http://www.benefits.va.gov/homeloans/purchasecashout.asp


Here's my advice about "RENT TO OWN:" Don't Do it!

Rent To Own is a better deal for the Seller than it would ever be for a potential Buyer.

The basic concept is finding a way to "force" savings towards a down payment by including a portion of the monthly rental that goes towards that savings. You pay your rent every month and your Landlord deducts a pre-determined amount to hold in a special bank account, called an "escrow" account. Your Landlord holds that money until you have saved up enough---through this "forced-savings" method---to meet a down payment to purchase the home.

The terms of the purchase price, including the down payment amount, and the amount to be set aside from the rental for down payment, are all set down at the time of lease signing.

It's all about helping the renter/tenant save up enough money for a down payment to buy a home (in this case, the one you're renting). But this is a better deal for the Seller because he gets to lock in a purchase price and a buyer today for a future sale.


Saving money for a down payment? Well, heck, you can do that on your own.


If you are dedicated to the idea of buying your own home, you can create your own savings plan to save up enough money for a down payment. And when you have saved up enough for a down payment, if that takes a year or two or more, YOU get to decide on the price you're willing to pay for the house at that time based on current market conditions. You won't be locked in to a price that may be a lot higher than what the house is worth in the future.

With Rent To Own you'll be locked in both to the house and to the price, even if it takes you 3 years to save enough through the forced savings of the rent payments. What happens if three years from now your life situation has changed? Maybe you need a bigger/smaller home. Maybe your employment has relocated. Maybe your credit or income is insufficient to qualify for a mortgage loan.


Find a way to save up on your own; not with Rent To Own.


Sit down with a local Mortgage Banker and get yourself prequalified, too. You may find you're better qualified than you think you are, and, if you're not, at least you'll know how much loan your income and credit qualify you for, and how much you have to save towards down payment and closing costs.

Trevor Curran
NMLS #40140

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1 vote Thank Flag Link Wed Feb 6, 2013
Hi Amanda,

There are some sellers who will do what is called a lease purchase, or rent to own, but most sellers prefer to do one or the other. The risk to you is that if you put down 5% or 10% when you enter the lease, and the seller defaults on their loan and is foreclosed on, you could lose your downpayment and would be kicked out of the house.

Make sure you are careful and work with a good Realtor in the area to help you out. I always recommend renting until you are ready to buy and then find a place to call your own!
0 votes Thank Flag Link Wed Feb 6, 2013
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