What is rent to own?
Rent to own is a housing arrangement that combines a traditional rental lease with an option to purchase the home. You rent the property for a set period, and during that time, you have the exclusive right to buy it at a predetermined price. A portion of your monthly rent may be credited toward your down payment or purchase price.
How is rent to own different from regular renting?
With regular renting, your monthly payments only cover your right to live in the property. With rent to own, part of your payment builds equity toward owning the home. You also lock in a purchase price upfront, protecting you from market increases, and you have the exclusive option to buy the home when you’re ready.
Is rent to own the same as a lease option or lease purchase?
These terms are often used interchangeably, but there are technical differences. A lease option gives you the right (but not the obligation) to purchase, while a lease purchase may obligate you to buy. In North Carolina, these arrangements must follow specific legal guidelines. We can explain the exact terms of your agreement in detail.
Qualifying and Requirements
Do I need good credit to qualify?
No. One of the main benefits of rent to own is that it’s designed for people with bad credit, no credit, or past financial challenges. We look at your overall financial picture, including income stability and ability to make monthly payments, rather than just your credit score.
What credit score do I need?
While we’re flexible with credit scores, we do evaluate each applicant individually. Many of our clients have credit scores below 600, and some have bankruptcy or foreclosure in their past. The key is demonstrating stable income and a commitment to improving your financial situation.
How much do I need for a down payment or upfront fee?
This varies by property and agreement, but rent to own typically requires less money upfront than a traditional home purchase. You may need to pay an option fee (usually 1-5% of the purchase price) which gives you the exclusive right to purchase the home. This fee may be credited toward your purchase price.
What kind of income do I need?
You need to demonstrate stable, verifiable income sufficient to cover the monthly rent payments. We work with W-2 employees, self-employed individuals, and those with non-traditional income sources. Generally, your housing costs should not exceed 40-45% of your gross monthly income.
Can I qualify if I’m self-employed?
Yes. We understand that self-employed individuals often face challenges with traditional lenders. We can work with you as long as you can document your income and show financial stability.
The Process
How long is the rental period before I can buy?
Typical rent to own agreements run from 1 to 3 years, though the exact term is negotiable. This gives you time to improve your credit, save additional funds, and prepare to qualify for a mortgage. You can often purchase earlier if you’re ready.
What happens to the rent credits if I don’t buy?
This depends on your specific contract. In most agreements, if you choose not to exercise your option to purchase, the rent credits and option fee are forfeited. This is why it’s important to be committed to the goal of homeownership before entering a rent to own agreement.
Can I get out of the agreement if I need to move?
Rent-to-own agreements are legally binding contracts. Breaking the lease typically means forfeiting your option fee and any rent credits. Some agreements may include early exit provisions, but these vary by contract. Always review the terms carefully before signing.
Who is responsible for repairs and maintenance?
This varies by agreement. In some rent to own contracts, the tenant is responsible for minor repairs and maintenance, similar to a homeowner. Major repairs or structural issues may be the responsibility of the property owner. Your specific responsibilities will be clearly outlined in your contract.
Are property taxes and insurance included in my rent?
Usually, the property owner pays property taxes and maintains homeowners insurance during the rental period. However, you may be required to carry renters insurance. When you purchase the home, you’ll become responsible for taxes and insurance as the new owner.
Financial Questions
How is the purchase price determined?
The purchase price is typically set at the beginning of the agreement based on current market value or expected future value. This price is locked in for the duration of your lease, protecting you from market increases. Some agreements include appreciation clauses, so it’s important to understand how your specific purchase price is calculated.
Will I still need a mortgage to buy the home?
Yes, in most cases. Unless you can pay cash, you’ll need to qualify for a mortgage when it’s time to exercise your purchase option. The rental period gives you time to improve your credit and financial position so you can qualify for better mortgage terms.
Can I make improvements to the home while renting?
This depends on your agreement. Some contracts allow or even encourage improvements since you’re working toward ownership. However, you should always get written approval before making significant changes to the property. Any improvements you make generally stay with the property.
What happens if property values go down?
If you’ve locked in a purchase price and the market value drops below that price, you may choose not to exercise your purchase option. However, you would forfeit your option fee and rent credits. Some buyers still choose to purchase because of the rent credits they’ve built up and their commitment to the home.
Location and Properties
What areas of Greensboro do you serve?
We serve all of Greensboro and surrounding areas. Our properties are available in neighborhoods throughout the city, including areas near downtown, UNCG, Fisher Park, Lindley Park, and many other desirable communities.
How often do you get new listings?
Our inventory changes regularly. We recommend checking our listings page frequently and contacting us to discuss your specific needs and preferences. We can notify you when properties become available in your desired neighborhoods.
Can I choose any house in Greensboro for rent to own?
Our rent to own homes Greensboro NC listings feature properties currently available in rent to own program. While you can’t choose just any house on the market, we work to match you with homes that meet your needs and budget in your preferred areas.
Legal and Protection
Is rent to own legal in North Carolina?
Yes. Rent to own agreements are legal in North Carolina and are governed by state laws designed to protect both tenants and property owners. These contracts must be in writing and clearly outline all terms and conditions.
Should I have a lawyer review my contract?
We strongly recommend having a real estate attorney or housing counselor review any rent-to-own agreement before signing. This ensures you understand all terms, obligations, and your rights under North Carolina law.
What protections do I have as a rent-to-own tenant?
North Carolina law requires rent to own agreements to be clear and in writing. You have the right to understand all terms, including the purchase price, option period, rent credits, and responsibilities. You also have the right to seek legal counsel before signing.
What happens if the property owner sells the house to someone else during my lease?
Your rent to own agreement should include provisions that protect your purchase option. The contract is typically recorded or includes language that prevents the owner from selling to another party during your option period. This is another reason why legal review is important.
Next Steps
How do I get started?
Browse our current listings to see available properties. When you find homes you’re interested in, sign up for the program. We’ll explain the process, answer your questions, and help you determine if rent to own is the right path for you.
What documents do I need to apply?
Typically, you’ll need proof of income (pay stubs, tax returns, or bank statements), identification, rental history, and employment verification. We’ll provide a complete list of required documents when you’re ready to apply.
How long does the approval process take?
Our approval process is generally much faster than traditional mortgage approval. Depending on how quickly you provide documentation, you can often be approved and move into your home within a few weeks.
Still Have Questions?
Contact us today to speak with a rent to own specialist who can answer your specific questions and help you determine if this path to homeownership is right for you.