Amy Beardsley, Author at Semya-Moya

Rent-to-Own Homes in San Antonio and Best Alternatives (2023 Guide)

Amy Beardsley — Sat, 22 Apr 2023 01:22:23 +0000

Why trust us: To create this comprehensive guide, we researched the available housing options in San Antonio, consulted with local housing experts, and had the guide reviewed by a real estate professional with rent-to-own experience. Learn more.

Rent-to-own allows potential homeowners to rent a property with the option to purchase it during the lease agreement (usually one to five years). It provides an alternative path to homeownership if you might not qualify for a traditional mortgage or can't afford a large down payment.

But rent-to-own programs aren't cheap. There’s usually an up-front "option fee" or down payment (1–2.5% of the home's value). And the monthly rent is typically higher than average in your area ($1,750 for a 3-bed home in San Antonio).

What to know about rent-to-own homes in San Antonio

Legitimate rent-to-own programs are lacking

"It's hard to get somebody into one of the rent-to-own programs, because either the programs aren't really effective, or we just don't have enough options," Ryan McDaniel, a realtor with Keller Williams Heritage, explains.

And according to Martin Orefice, CEO of Rent To Own Labs, most rent-to-own homes in San Antonio are single-family or duplex houses owned by landlords or investors.

Buying may be a better choice

"The whole goal of rent-to-own is getting the purchase, but if they're qualified now, we usually [recommend] actual ownership," says McDaniel. "Buying a house should be possible "if you've got good credit and income coming in."

Home prices in San Antonio are also lower than the national median ($340,000 compared with $415,000) — so the conventional home buying process may be more affordable in the long run than a rent-to-own program.

Low credit is the biggest roadblock that keeps people from qualifying for a mortgage in San Antonio, he adds. Down payment assistance programs and grants can make buying a home easier by offering mortgages with more relaxed requirements.

Compare rent-to-own options in San Antonio

Legitimate rent-to-own companies operating in the San Antonio market include Divvy Homes and Home Partners.

Divvy Homes is one of the most well-known rent-to-own companies operating in the area. It’s also the easiest to qualify for, based on its minimum requirements (550 FICO and $2,500/mo income).

McDaniel has referred some of his clients to Divvy and says it's "a great deal if someone is going to actually stick with it and buy the house." And since Divvy charges a 2% termination fee (which is higher than its competitors), you should only consider it if you're confident you'll buy the house at the end of your lease.

Home Partners of America has over 2,000 active listings in the San Antonio market, low up-front costs, and easy eligibility requirements (though higher than Divvy's).

Other rent-to-own companies, such as Trio Homes, have significantly fewer listings and options available in San Antonio.

Landlords

Rent-to-own agreements come in a variety of payment structures, lease lengths, purchase prices, and other conditions.

Independent landlords of rent-to-own homes can set their own eligibility requirements. Before you agree to any kind of rent-to-own program, check that the contract terms align with your current financial profile and future goals.

» LEARN: How to negotiate a rent-to-own contract

Get help from a local realtor

If you're considering rent-to-own homes, either through a company or a local listing, it's smart to have a local realtor in your corner.

A realtor can help guide you through the ins and outs of rent-to-own homes, including spotting red flags, fraudulent listings, and bad contracts. They can also refer you to a mortgage lender to see if you qualify for financing to buy now (versus going the rent-to-own route).

» LEARN: How to find a realtor that's right for you

🔎 Pro tip

Your credit score affects your ability to qualify for a mortgage. Check your credit score now, and you can take work to improve it and correct any mistakes in your credit report.

Not sure where your credit stands? Get your credit report at AnnualCreditReport.com. This free resource gives you access to your scores from all three major credit bureaus (Equifax, Experian, and TransUnion) once a year.

Rent-to-own home alternatives in San Antonio

Down payment and closing cost assistance programs

Neighborhood Housing Services of San Antonio provides first-time home buyers in Bexar County with up to $20,000 in the form of a second mortgage to use toward their down payments or closing costs.

Texas Homebuyer Program gives eligible first-time home buyers funds toward down payments and closing costs through its network of approved mortgage lenders.

State grants

San Antonio Homeownership Incentive Program (HIP 120) offers 0% interest and no-payment loans of $1,000 to $30,000 to assist with the down-payment and other home buying costs. The program forgives 75% of the loan over 10 years.

Homes for Texas Heroes Program offers home loans and down payment assistance to state-employed professionals, including educators, emergency personnel, veterans, and nurses. It requires a minimum credit score of 620 and has maximum income requirements.

Local affordable housing options

Opportunity Home San Antonio offers rental housing and Section 8 assistance to children, adults, and senior citizens. The program has over 6,000 public housing units at 70 properties, as well as programs for veterans and individuals experiencing homelessness.

First-time home buyer loans

Loan type	Min. down payment	Min. credit score	Max. debt-to-income level
FHA	3.5% \| 10%	580 \| 500–79	43%
USDA	None	Varies by lender	41%
VA	None	580	41%
Rental	1–2 months rent	680	33%
Conventional	20%	620	45%

» LEARN: Improve your credit score to expand your borrowing options

FHA loans

FHA loans are a popular financing option for first-time home buyers with limited savings or credit history. If you have a credit score of 580 or above, you can qualify for a 3.5% down payment. However, some properties may not be eligible for FHA financing, and extra costs like mortgage insurance premiums will apply.

USDA loans

USDA loans provide financing in rural areas, including payment assistance, for low-income applicants. The zero-down program is available in select San Antonio areas, and you’ll want to look outside Texas State Highway Loop 1604 for eligible properties.

VA loans

VA loans make homeownership more accessible to veterans by offering benefits such as zero-down financing and no minimum credit score requirement. You can also skip private mortgage insurance. While VA loans have specific eligibility requirements, including a one-time funding fee, they can be a great option for military personnel and their families.

Free resources in San Antonio

Local housing counselors

San Antonio housing counselors offer free pre-purchasing and rental counseling, making them a valuable resource for anyone looking to buy a home. They can also provide unbiased opinions on rent-to-own options and point you to other useful resources.

» FIND: HUD-approved housing counseling locations in Texas

Housing education programs

The San Antonio Housing Authority provides various services for low-income families, including affordable housing options and rental assistance programs. Additionally, they offer a housing education program aimed at helping families prepare for homeownership by providing resources and training on financial literacy, credit management, and other essential skills.

Neighborhood Housing Services of San Antonio (NHSS) is a nonprofit organization that provides various services to support affordable homeownership and the revitalization of neighborhoods in San Antonio. NHSS offers a comprehensive homeownership education program that equips families with the knowledge and skills necessary to navigate the home buying process, from financial preparedness to finding and purchasing a home.

Why you should trust us

Our team at Clever spent several weeks learning the ins and outs of rent-to-own homes to create this comprehensive guide. We identified legitimate companies that operate in your area, consulted with local realtors, and researched government housing resources.

Our experts

Ryan McDaniel, a San Antonio realtor with Keller Williams Heritage, with more than 15 years of combined experience in wealth management, financial advising, and real estate.
Martin Orefice, CEO of Rent-to-Own Labs, which offers an online platform for finding legitimate rent-to-own listings.
Steve Nicastro, a real estate professional who has advised numerous clients on whether rent-to-own housing is a good option for them. His expertise helped us provide a more in-depth understanding of the rent-to-own process.

Rent-to-Own Homes in Houston and Best Alternatives (2023 Guide)

Amy Beardsley — Sat, 22 Apr 2023 01:21:53 +0000

Why trust us: To create this comprehensive guide, we researched the available housing options in Jacksonville, consulted with local housing experts, and had the guide reviewed by a real estate professional with rent-to-own experience. Learn more.

Limited housing inventory in the Houston market available for home buyers has made it harder to purchase a home, according to Jessica Githens, a realtor based in The Woodlands. This shortage of housing has led some prospective home buyers to pursue alternative housing options, including rent-to-own homes.

Rent-to-own is often viewed as an option for prospective buyers who have a plan to improve their credit or income to qualify for a mortgage now, but finances while renting. A portion of your monthly payment also gets saved toward a down payment for the home’s eventual purchase.

Several national rent-to-own companies, including Divvy Homes and Home Partners of America, currently operate in Houston, and claim that they provide a clear path to homeownership. Read our guide to learn more about rent-to-own homes in Houston and explore potential housing alternatives.

What to know about rent-to-own homes in Houston

Popular option for housing stability

"In the last couple of years, as property values increased, landlords were essentially telling tenants 'sorry, lease is up,' and then selling the home," she says.

As a result, potential buyers or renters might consider a rent-to-own home to get locked into a rental agreement for the next one to three years or more, while retaining the option to buy the home.

A risky option, thanks to falling home prices

The decline in Houston's housing prices can pose risks for people locked into a rent-to-own agreement. Median sales prices on single-family homes in Houston have fallen by $30,000 since the peak of June 2022.

Here's why it could pose a challenge: Lenders typically provide a loan only up to the home's appraised value. So if your option price — the predetermined price to buy the home — exceeds the appraisal value, you could be on the hook for the additional amount or risk breaking the contract.

Githens warns that rent-to-own can be costly, and it's not a suitable option for everyone. She advises her clients to exhaust all other buying options and resources first. "Then if we know that those other options are 100% a no, we may explore [the rent-to-own] route."

⚠️ A contract for deed is NOT the same thing as rent-to-own

In a contract for deed (also known as seller financing, land contract, or installment sale contract), the buyer makes a down payment and monthly payments to the seller — but doesn't gain any equity in the property or own it until the final payment is made.

"Contract for deed buyers have all of the responsibilities of home ownership…but none of the protections," explains Lisa Nelson of the Federal Reserve Bank of Cleveland.

Be aware that contracts for deeds can carry strict conditions. For example, the Texas Attorney General warns consumers that they can lose their homes if they're just a few days late on one payment.

» MORE: Why is the Federal Reserve studying contracts for deed?

Compare rent-to-own options in Houston

A handful of national rent-to-own companies service Houston and the surrounding areas.

Home rental company	Min. credit score	Min. income/mo	Up-front cost*
Divvy Homes	550	$2,500	1-2% ($3,750–7,500)
Home Partners of America	620	$3,333	1–2 months security deposit
Pathway	600	$4,167	2.5% ($9,375)
Trio	580	$3,600	1% ($3,750)
* Based on a median home price of $358,000 in Houston. Costs do not include earnest money.

Trio Homes works best if you have a lower credit score or lack a substantial down payment. With a small option fee, you can get into a house for very little money down and rent it while building equity in the property.

Pathway Homes is an alternative if your finances are in good shape, but you want a longer lease period. You need a slightly higher credit score and a larger down payment to qualify. You can rent for up to five years, but the home's option price will also increase by 3% to 6% each year, making your home purchase less affordable.

Divvy Homes' rent–to–own program is among the easiest to qualify for because it has the lowest minimum credit score and income requirement. It has a termination fee of 2% of the home's price if you can't or don't buy the house at the end of your lease period.

Home Partners of America is an option to consider if you don’t have much in savings. You'd need slightly better credit than for Divvy Homes, but it's still one of the easiest rent-to-own programs to qualify for.

🔎 Pro tip

Your credit score affects your ability to qualify for a mortgage. Check your credit score now, and you can take work to improve it and correct any mistakes in your credit report.

Rent-to-own home alternatives in Houston

"Between down payment assistance and seller concessions, I've seen a lot of people close on their home while only bringing $500 or less to closing," says Janese Williams, a mortgage loan originator with Champions Mortgage, based in Sugar Land.

Down payment and closing cost assistance programs

Houston Homebuyer Assistance Program offers first-time home buyers a no-interest loan that's forgivable if they live in the home for five years. To qualify, you must have a household income at or below 80% of Houston's area median income.

Houston Neighborhood Lift Down Payment Assistance Program (offered in partnership with Wells Fargo and NeighborWorks America) provides $15,000 for home buyers to fund a down payment or closing costs on eligible properties — along with home buyer education.

Texas State Affordable Housing Corporation (TSAHC) offers two home buyer programs that provide mortgage loans and funding to use for your down payment. You can select either a grant or a forgivable second lien loan — you need to repay it only if you sell or refinance the property within three years.

Home Sweet Texas is open to all first-time buyers in Texas.
Homes for Texas Heroes is specifically for state-funded employees (such as teachers and emergency professionals) and veterans — though it has a slightly higher income threshold.

City grants

City of Houston's Homebuyer Choice Program provides up to $150,000 for low– and moderate-income residents to reduce the cost of purchasing a home. Eligible applicants must contribute at least $70,000, which can include funds from the mortgage you're applying for.

Local affordable housing options

Houston Housing Authority's Housing Choice Voucher Program(formerly Section 8) supports a range of housing options, including apartments, duplexes, and single-family homes.

Houston Habitat for Humanity helps families who need affordable, quality housing to those willing to contribute "sweat equity": volunteering to build other Habitat homes for families in need.

First-time home buyer loans

Loan type	Min. down payment	Min. credit score	Max. debt-to-income level
FHA	3.5% \| 10%	580 \| 500–79	43%
USDA	None	Varies by lender	41%
VA	None	580	41%
Rental	1–2 months rent	680	33%
Conventional	20%	620	45%

» LEARN: Improve your credit score to expand your borrowing options

FHA loans

FHA loans are a common choice for a first-time home buyer who lacks a large down payment. You can purchase a home with as little as 3.5% down and qualify with a low credit score. Borrowers are usually required to pay mortgage insurance, and the property must meet specific qualifications to be eligible for this type of loan.

USDA loans

Some towns outside of the Houston area are eligible for a USDA Rural Development home loan, including Columbus, Hempstead, and Sealy. USDA loans offer low interest rates, and require no down payment, making it an affordable option for first-time home buyers looking for a home in a rural area.

VA loans

Home loans through the Veterans Administration are available to veterans, active-duty service members, and surviving spouses. This program offers a 0% down payment option and has a low minimum credit score requirement, although requirements can vary by lender.

Free resources in Houston

Local housing counselors

A local housing counselor is a valuable resource when considering your housing options. They offer expert guidance and support, providing unbiased opinions and advice on the rent-to-own market in your area. They can also offer insights into other resources that can help you achieve your housing goals.

» FIND: HUD-approved housing counseling locations in Texas

Housing education programs

Avenue currently offers two class options for first-time home buyers in the Houston area. Its classes will help you learn how to review your finances ahead of a home purchase, learn about the different loan options available, the home buying process, and how to avoid common pitfalls.

Easterseals Greater Houston's free virtual class covers the basics of home buying, how to get down payment assistance, and budgeting for a mortgage. The course is taught by realtors and loan officers and requires a total of six hours of attendance for completion.

Why you should trust us

Our experts

Jessica Githens, a realtor with CB&A Realtors, based in The Woodlands.
Janese Williams, a mortgage loan originator with Champions Mortgage, based in Sugar Land.
Steve Nicastro, a real estate professional who has advised numerous clients on whether rent-to-own housing is a good option for them. His expertise helped us provide a more in-depth understanding of the rent-to-own process.

Rent-to-Own Homes in Dallas and Best Alternatives

Amy Beardsley — Sat, 22 Apr 2023 01:21:31 +0000

Why trust us: To create this comprehensive guide, we researched the available housing options in Orlando, consulted with local housing experts, and had the guide reviewed by a real estate professional with rent-to-own experience. Learn more.

Rent-to-own homes allow you to rent a property and save a portion of the monthly rent towards a down payment for the home’s eventual purchase. This option is often viewed as an alternative for prospective home buyers who don't qualify for financing right away due to less-than-perfect credit (580 or lower), low income, or a lack of down payment funds.

Rent-to-own programs claim they can put you on a path to homeownership. But success rates vary by company, and the majority of customers end up not buying the house.

Learn more about rent-to-own homes in Dallas and alternatives for affordable homeownership, including down payment assistance programs and grants.

What to know about rent-to-own homes in Dallas

Difficult buy-back process

Rising mortgage interest rates, falling home prices, and limited housing inventory are making it near-impossible for Dallas locals to find and purchase a rent-to-own home, says Elena Garrett, a realtor in Dallas–Fort Worth who has worked directly with Divvy Homes.

"Some areas are seeing a price decrease of over $50,000 to $100,000 per home," she says. "This causes problems with the rent-to-own buy-back process and makes it hard for people to complete the purchase."

"Many of my clients are exiting the Divvy program [before making the home purchase] because they cannot figure out how to make its buy-back work," says Garrett.

Limited options

Business activity for Divvy Homes and Home Partners of America — the two largest rent-to-own companies in Dallas — has slowed significantly along with the general housing market slowdown, according to Garrett.

Other companies just don't have many housing options available. For example, Pathway Homes and Trio Homes have only a handful of rent-to-own options listed on its website at the time of article publication — combined.

» LEARN: How to find rent-to-own homes

Widespread fraud

"Anything that's not Divvy or Home Partners is 99% a scam [in the Dallas market]," Garrett warns." Learn how to spot a rent-to-own scam.

Compare rent-to-own options in Dallas

Our top rent-to-own picks are Divvy Homes and Pathway Homes — but with important caveats.

Divvy Homes lists hundreds of Divvy-ready properties (i.e., homes that it already owns) on its website, but you won't get the option to buy a new home through the company.

Garrett explains that Divvy-ready homes were "previously rented by Divvy customers who decided not to proceed with the purchase, and Divvy puts them back on the market as an option for rent-to-own."

Pathway Homes offers two significant advantages over its competitors. First, these programs let you lock in your purchase price for five years, potentially benefiting from the home's rise in value. Second, you can build up a down payment as you rent.

Home rental company	Min. credit score	Min. income/mo	Up-front cost*
Divvy Homes	550	$2,500	1–2% ($3,750–7,500)
Home Partners of America	620	$3,333	1–2 months security deposit
Pathway	600	$4,167	2.5% ($9,375)
Trio	580	$3,600	1% ($3,750)
* Based on a median home price of $435,000 in Dallas. Costs do not include earnest money.

Other rent-to-own companies serving Dallas

You likely won't be able to buy a new home in Dallas through rent-to-own companies because not many currently operate there on a big scale. However, if you come across homes owned by a major home rental company, here are some considerations:

Home Partners may be an option if you have better credit but lack savings. It requires a security deposit, and you won’t pay a termination fee if you change your mind about buying the property or a down payment.
Pathway requires a higher down payment and monthly income than other companies, so it may not be an option if you’re short on cash or have a lower income.
Trio Homes works best if you struggle to qualify for a traditional mortgage but can afford monthly payments on a property.

Independent landlords

Garrett cautions against choosing a rent-to-own home that's not offered by an established company. Landlords in Dallas who offer lease-to-own can set their own eligibility criteria — payment structure, lease length, purchase price, and other conditions.

Even if the local landlord is legitimate and not trying to scam you, Garrett explains that they may underestimate the complexities of rent-to-own, create contracts without consulting an attorney, and possibly overcharge you.

Get help from a local realtor

If you're considering rent-to-own homes, either through a company or a local listing, it's smart to have a local realtor in your corner.

» LEARN: How to find a realtor that's right for you

🔎 Pro tip

Your credit score affects your ability to qualify for a mortgage. Check your credit score now, and you can take work to improve it and correct any mistakes in your credit report.

Rent-to-own home alternatives in Dallas

Down payment and closing cost assistance programs

The Upfront Cost Assistance Program (UPCAP) offers low- to moderate-income households with funds for closing costs and down payment, as well as home buyer education and mortgage counseling.

The Texas Homebuyer Program provides home loans, down payment assistance, and closing cost assistance. Unlike many other programs, it does not require applicants to be first-time home buyers or meet certain employment qualifications.

Bank of America offers several down payment and closing cost assistance programs for first-time home buyers:

Community Affordable Loan Solution offers low down payment and closing costs and requires no mortgage insurance or minimum credit score. Eligibility is based on income and location, and you must complete an approved home buyer course BEFORE applying.
Our America's Home Grant Program offers a lender credit of up to $7,500 for certain closing costs, while its Our Down Payment Grant Program provides a grant of up to 3% of the home's purchase price (max $10,000).

First-time home buyer loans

Loan type	Min. down payment	Min. credit score	Max. debt-to-income level
FHA	3.5% \| 10%	580 \| 500–79	43%
USDA	None	Varies by lender	41%
VA	None	580	41%
Rental	1–2 months rent	680	33%
Conventional	20%	620	45%

» SEE: Improve your credit score to expand your borrowing options

FHA loans

FHA loans are popular with first-time home buyers without a large down payment. You can get into a house with just 3% down if your credit score is at least 580. Just note that you must pay mortgage insurance and the property must meet certain requirements to qualify.

USDA loans

Some ZIP codes (such as 75159 and 75172) are eligible for a USDA Rural Development home loan. These loans offer low interest rates without a down payment, making it an attractive option for first-time home buyers looking for rural property.

VA loans

Eligible veterans, active-duty service members, and surviving spouses can apply for VA loans. The program offers a zero down payment option and has a low minimum credit score requirement that can vary by lender. However, you’ll pay a funding fee depending on your military service category and down payment amount.

State, city, and nationwide grants

The Dallas Homebuyer Assistance Program (DHAP) provides financial assistance in the form of a forgivable home loan of up to $60,000 for low- and moderate-income home buyers. To qualify, applicants must work in educational instruction and library occupations, healthcare or protective services, and meet the program income requirements.

Local affordable housing options

Opportunity Home Dallas provides access low-income residents in Dallas have access to affordable housing options. Armed with voucher programs like Section 8 and a management team that oversees low-income housing units, this program is dedicated to ensuring that eligible residents have access to safe and affordable housing.

Free resources in Dallas

Local housing counselors

The Dallas County Home Loan Counseling Center and Texas Department of Housing and Community Affairs both provide free counseling to help you on your journey to buy or rent a home. Local housing counselors can give you unbiased information on rent-to-own homes in Dallas, and point you to other useful resources, such as down payment assistance programs and financing options.

» FIND: HUD-approved housing counseling locations in Texas

Housing education programs

The Dallas Housing Authority offers services to low-income families, which include a housing education program that prepares them for homeownership. The goal is to empower families to achieve their dreams and create a better future for themselves and their communities.

Dallas Habitat for Humanity offers free online educational resources for people interested in buying a home. These resources include live webinars and on-demand courses, which cover several topics such as budgeting, credit, savings, debt management, and homeownership.

Why you should trust us

Our experts

Elena Garrett, a realtor with Keller Williams Central 75 in Dallas. Garrett has direct experience assisting clients with rent-to-own programs in Dallas–Fort Worth.
Steve Nicastro, a real estate professional who has advised numerous clients on whether rent-to-own housing is a good option for them. His expertise helped us provide a more in-depth understanding of the rent-to-own process.

Rent-to-Own Homes in Orlando and Best Alternatives

Amy Beardsley — Sat, 22 Apr 2023 01:20:37 +0000

Rent-to-own homes in Orlando allow potential homeowners with low credit or limited funds to rent a property, with an option to buy it after a set period. Often, a portion of the rent goes toward an eventual down payment on the house.

You get the potential benefits of building equity while renting and lower costs up front. The big drawbacks to consider include higher monthly payments and the risk of losing the home if you can't secure financing at the end of the lease period.

Although rent-to-own still remains a relatively uncommon option (only about 6% of purchases) it’s becoming more popular across the country.

"The Orlando metro area is one of the most sought-after real estate markets in the U.S., and there is no shortage of potential renters interested in rent-to-own opportunities," said Josh Wilson, licensed realtor and co-founder of the travel website That Florida Life.

What to know about rent-to-own homes in Orlando

Variety of rent-to-own options

Martin Orefice, CEO of the Orlando-based Rent to Own Labs, tells us that the high churn in the area, thanks in part to the business brought by the Walt Disney World Resort, means "there are lots of rent-to-own options available, from individual homeowners, small landlords, and larger companies."

However, Wilson warns that, "On average, renters who rent-to-own can expect to pay between 10% and 15% above the local market rental prices."

Tight housing market

"Orlando's competitive real estate market is one factor contributing to the rent-to-own market's strength," Wilson says. And according to Realtor.com, the median listing home price in Orlando was $362,000 in January 2023 — trending up 9.7% year over year.

"There may be a price premium and a longer search period for the ideal property because in some places, demand for housing exceeds availability." Wilson adds. "Rent-to-own contracts can give renters the chance to buy a home before it becomes available on the general market, giving them a competitive advantage over regular home buyers."

Widespread insurance fraud

Because Florida is prone to damage from hurricanes, Orlando has been experiencing homeowners insurance fraud. In fact, the National Insurance Carriers Bureau estimates that Floridians have lost $3 billion to $6 billion to fraudulent claims following Hurricane Ian.

Orefice explains, "It's still making it hard for many homeowners to get insurance for their homes at anything like reasonable rates — and if you do get insured, there's no telling if your claims will actually be paid for." This could mean that rent-to-own tenants could struggle to afford homeowners' insurance at the end of the lease period, even if everything else goes right.

Compare rent-to-own options in Orlando

Home rental company	Min. credit score	Min. income/mo	Up-front cost*
Dream America	500	$4,000	1% ($4,350)
Divvy Homes	550	$2,500	1–2% ($4,350–8,700)
Trio	580	$3,600	1% ($4,350)
Home Partners of America	620	$3,333	1–2 months security deposit
Landis	680	$5,000	2–2.5% ($8,700–10,875)
* Based on a median home price of $435,000 in Orlando. Costs do not include earnest money.

Because the qualifications vary so much by rent-own-company, consider how your circumstances could affect your living situation:

Your timeline for buying the house
Your credit score and history as a renter
Your income and how much cash you have available
Accommodation for accessibility, pets, etc.

Orefice adds, "While some rent-to-own homes will be listed on mainstream real estate sites like Zillow, there are also specialty sites that focus on this, like my own Rent To Own Labs, which has over 1000 RTO listings in Orlando."

🏆 Top pick: Trio

Trio Homes has a great reputation for transparency and customer service and boasts a high success rate of 78% for tenants who have completed the program, making it a promising option for those looking for a path to homeownership. It's best if you need more flexibility in your housing situation but aren't ready for a traditional mortgage.

For new Orlando residents: Home Partners or Landis

Home Partners of America is a great low-risk option, especially if you don't have a specific home in mind and don't want a down payment or termination fees. However, success rates are relatively low: 43% in 2022 — though they have improved.

Landis is best for those who have a specific home type in mind and are able to meet its strict income, credit score, and down payment requirements. Qualifying for Landis may be difficult, as it has the highest eligibility standards among rent-to-own companies.

For poor credit: Divvy or Dream America

Divvy Homes and Dream America may be good options if you have a credit score below 550 but otherwise decent and steady cash flow.

Divvy Homes is easier to qualify for and requires a lower monthly income than Dream America ($2,500 vs. $4,000), and it charges less up front. However, you may be paying a lot over the course of your lease, and you pay a hefty fee if you break it.

Dream America requires a higher monthly income and at least a year of on-time payments, as well as a substantial up-front investment, including a 3% earnest money deposit and a 1% onboarding fee. The upside is that the strict requirements mean you're more likely to be able to buy after the lease.

"RTO is also a popular option for smaller landlords looking to unload older properties, and these can often be pretty hit-or-miss," says Orefice.

🏡 Get help from a local realtor

An Orlando real estate agent with direct rent-to-own experience can be an invaluable resource to help you spot legit housing, weed out the scams, and point out common roadblocks or red flags. They'll also help you determine if rent-to-own is actually a good option for you — or if you're better off applying for a mortgage, or renting and saving instead.

» Clever can match you with multiple real estate agents in Orlando until you find one with the right expertise.

🔎 Pro tip

Your credit score affects your ability to qualify for a mortgage. Check your credit score now, and you can take work to improve it and correct any mistakes in your credit report.

Rent-to-own home alternatives in Orlando

Before going with a rent-to-own arrangement, Martin Orefice recommends that you "sit down and do the math. Look at how the option fee and monthly rent payments for a [rent-to-own] home compared to a similar mortgage, and go with what's going to work best for you."

Down payment and closing cost assistance programs

The City of Orlando's Down Payment Assistance Program assists first-time home buyers with down payment and closing costs when buying a house within the city limits. You could also qualify if you haven’t owned a home in the past three years. The amount varies depending on your household income, and you must have.

In fact, according to Orefice, "For those who are truly struggling, this program can help people buy a house for as little as $1,000 down."

Florida Housing offers several down payment assistance programs:

Florida Assist (FL Assist) and Florida Homeownership Loan Program (FL HLP) Second Mortgage provide up to $10,000.
Housing Finance Agencies (HFA) Preferred and Advantage PLUS provide 3%, 4%, or 5% of the total loan amount in a forgivable second mortgage.
Hometown Heroes Housing Program gives up to 5% of a home's purchase price.

Eligibility can vary by program, income, or credit score, and some require a home buyer education course.

Seminole County Purchase Assistance Program helps very low- to moderate-income first-time home buyers within Seminole County — who qualify for a mortgage through a certified Seminole County Lender — with down payments, principal, and closing costs.

Orange County Neighborhood Stabilization Program provides down payment and closing cost assistance if you meet income requirements and buy a previously foreclosed home in Pine Hills Azalea Park, Union Park, Holden Heights–Oakridge, or Meadow Woods.

Local affordable housing options

The Orlando Housing Authority (OHA) manages affordable housing options for seniors, low-income families, and individuals with disabilities through public housing, Section 8 vouchers, affordable rental opportunities, and other programs.

Habitat for Humanity of Greater Orlando and Osceola County helps low-income families build and purchase homes. To qualify, you must have a need for affordable housing, be willing to invest "sweat equity" hours, and demonstrate the ability to pay an affordable mortgage.

First-time home buyer loans

"While RTO is my specialty, I always encourage prospective home buyers to compare this strategy to a traditional mortgage in a granular way," Orefice, says. Mortgages can be especially worthwhile for first-time home buyers if they can qualify for FHA, USDA, or VA loans, for example."

Loan type	Min. down payment	Min. credit score	Max. debt-to-income level
FHA	3.5% \| 10%	580 \| 500–79	43%
USDA	None	Varies by lender	41%
VA	None	580	41%
Rental	1–2 months rent	680	33%
Conventional	20%	620	45%

» LEARN: Improve your credit score to expand your borrowing options

FHA loans

Homebuyers in Orlando often choose FHA loans as a common financing option. FHA loans are backed by the Federal Housing Administration and can be easier to qualify for than traditional loans.

USDA loans

USDA Rural Development loans are available for select rural properties outside of Orlando in places like Ocoee, Winter Garden, Kissimmee, and Osceola County. If you don’t mind living away from the city proper, you can take advantage of home financing options on top of down payment and closing cost assistance with a USDA loan.

However, Wilson and Orefice both recommend that you want to consider the impact of Orlando's climate — hurricanes, heavy rain, high humidity — on the property.

VA loans

VA loans offer eligible veterans and active-duty military members a financing option with a 0% down payment requirement and a low minimum credit score. It's worth noting that VA loans come with certain fees and requirements, so do your research and consult with an experienced lender who can guide you through the process.

Free resources in Orlando

Local housing counselors

Rent-to-own and purchasing a home outright can be tough. Orlando has local housing counselors available to help navigate the process. You can count on them for financial education, credit counseling, and information on local housing programs and resources.

» FIND: HUD-approved housing counseling locations in Florida

Housing education programs

City of Orlando Housing and Community Development Department is an 8-hour, HUD-led workshop that you can take in a weekend. A HUD-approved counseling agency leads the class, and you’ll get a certificate of completion at the end of the session.

Housing and Neighborhood Development Services (HANDS) of Central Florida. Private counseling sessions in Orlando and group homeownership education seminars are available from HANDS. Courses include improving your credit and maintaining a budget.

Why you should trust us

Our experts

Martin Orefice, CEO of Rent-to-Own Labs, which offers an online platform for finding legitimate rent-to-own listings.
Josh Wilson, a licensed realtor with Shark Tooth Realty in Venice, FL, and co-founder of That Florida Life.
Steve Nicastro, a real estate professional who has advised numerous clients on whether rent-to-own housing is a good option for them. His expertise helped us provide a more in-depth understanding of the rent-to-own process.

Rent-to-Own Homes in Atlanta and Best Alternatives (2023 Guide)

Amy Beardsley — Sat, 22 Apr 2023 01:19:35 +0000

Why trust us: To create this comprehensive guide, we researched the available housing options in Atlanta, consulted with local housing experts, and had the guide reviewed by a real estate professional with rent-to-own experience. Learn more.

Rent-to-own homes allow you to lease a home with the option to buy it in the future. Typically, they require a renewable "option fee" (1–2.5% of the property value) on top of monthly rent payment. Although rent is higher than local averages, part of the rent you paid can be applied toward a down payment for when you opt to buy the house.

According to Paige Grove, associate broker with Grove Homes Group in Buford, GA, multiple rent-to-own companies serve the Atlanta area, partly because of people frequently moving in and out of the city. Her team offers the option to home buyers who want to avoid getting locked into an interest rate before they're ready to buy.

"For new residents, it's hard to figure out where you want to live," she says. "It's a great way to try out a neighborhood and stay there for two or three years. You might find that's not really where you wanted to be, or maybe that's not the school district you wanted to be in. And you can walk away a lot easier from that than if you actually had to sell it."

Read our guide to find reliable rent-to-own homes in Atlanta and explore potential housing alternatives.

What to know about rent-to-own homes in Atlanta

Grove encourages buyers not to be afraid of rent-to-own. "As long as you've met [the company's] requirements — for one year, usually — you get your down payment back, which is two months what a normal rental would have been. So there's really no risk to the buyer."

Still, a rent–to-own company may charge a termination fee or move-out fee, so be sure to read your contract agreement carefully before signing

Location matters

Home prices in City of Atlanta are so high that people need to move a few counties out to afford homeownership. That's not a huge issue for commuters, since downtown Atlanta is still only a 45-minute drive.

According to Grove, Atlanta's rent-to-own housing options are more commonly available within city limits, but they get sparse the farther you get outside Interstate-285. One reason is that real estate companies tend to buy properties where their service networks (e.g., contractors) operate, which are often hyper-local.

If you're considering rent-to-own because you're moving to Atlanta, perhaps for work, you may have to choose between:

A traditional lease or mortgage in a commuter suburb or a Metro Atlanta county
An expensive rent-to-own arrangement in city limits that grants you flexibility to move if things don't work out

No guarantee

Some renters have issues trying to buy at the end of their lease periods if the homes don't appraise for the amount specified in the contract. Lenders will only lend the appraised value, so if your option price is above that, you're on the hook for the difference.

If you're considering rent-to-own as a cheaper alternative to homeownership in Atlanta, it might not be the best solution. You may end up spending just as much — or more.

Compare rent-to-own options in Atlanta

Home rental company	Min. credit score	Min. income/mo	Up-front cost*
Dream America	500	$4,000	1% ($4,000)
Divvy Homes	550	$2,500	1–2% ($4,000–8,000)
Trio	580	$3,600	1% ($4,000)
Pathway	600	$4,167	2.5% ($10,000)
Home Partners of America	620	$3,333	1–2 months security deposit
Landis	680	$5,000	2–2.5% (8,000–10,000)
* Based on median home price of $400,000 in Atlanta. Costs do not include earnest money.

🏆 Top picks: Trio and Pathway Homes

Trio Homes is best suited if you have a lower credit score or lack a substantial down payment. Program requirements include a small option fee (1%), and a portion of your rent goes toward building equity in the property. Trio also has a 78% success rate (i.e, buying the home at the end of the lease period) — one of the highest success rates in the industry.

Pathway Homes is an option if your finances are fair but you’re looking for a longer lease period. It requires a slightly higher credit score (600) and a larger down payment (2.5%). You can rent up to five years, though the option price increases substantially: 3–6% each year.

Trio and Pathway both allow you to move out if it's not a good fit with no penalty, so the risk to you is minimal.

Other rent-to-own options

Dream America

Dream America is a good fit if you have your finances in order, but have a lower credit score. To qualify, you'll need a high minimum monthly income ($4,000), at least a year of on-time rent payments, and $8,000 or more in savings. You can lease-to-own single-family homes or townhouses valued up to $400,000.

Divvy Homes

Divvy's rent–to-own program is among the easiest to qualify for, with the lowest minimum income requirement. You can lease-to-own a single-family home, townhouse, or even new construction valued up to $550,000.

Note that, if you don't end up purchasing the home, Divvy has a relisting fee of 2% of the property's purchase price. So unless you're confident you can afford to either buy the house or pay the termination fee, it could pose a big financial risk.

Home Partners of America

With low up-front costs and no down payment or termination fees, Home Partners is a good option if you don’t have much in savings. It has a large market in Atlanta and offers flexible renting options for single-family homes and townhouses up to $650,000. You'd need slightly better credit than for Divvy Homes, but it's still one of the easiest rent-to-own programs to qualify for.

Landis

Landis' rent-to-own program carries the strictest qualification requirements. You'll need a high monthly income, good credit score, and a higher-than-average down payment (2–2.5% of the home's purchase price). Landis also charges the highest termination fee among its peers (3%), making it a risky bet.

The upside is that qualifying for Landis means a higher chance you'll be able to buy the house at the end of the lease period. But while the company claims to have helped many people become homeowners, there is little information available about its success rates.

✍️ Editor's note: You can ask a landlord to consider a rent-to-own agreement

If you need more versatility and personalization, landlords in Atlanta are often willing to negotiate rent-to-own agreements, opening the door to a home despite a low credit score or minimal down payment. Just do your research and choose a landlord with a good reputation so that you're not left high and dry.

🏡 Get help from a local realtor

Whether you go with a rent-to-own company or an independent landlord, a real estate agent can help you find listings that meet your budget and needs. They'll also help you avoid rent-to-own scams, warn you about common issues and risks, and give you the support and guidance you need to make the best choice.

"The biggest [benefit of a realtor] to someone who's renting is it opens up not only the homes that are on the market for rent, but it opens up all the homes that are on the market for sale as an option to rent for them," says Grove.

Grove recommends that buyers reach out to realtors who have experience helping clients secure rent-to-own properties — many will even have personal contacts at rent-to-own companies.

"Be forthright in what your intentions are, and let the professionals get you set up with other pros to help you," she advises.

» Clever can match you with multiple real estate agents in Atlanta until you find one with the right expertise.

🔎 Pro tip

Your credit score affects your ability to qualify for a mortgage. Check your credit score now, and you can take work to improve it and correct any mistakes in your credit report.

Rent-to-own home alternatives in Atlanta

If rent-to-own isn't the best option for you, you still have several alternatives to consider.

Down payment and closing cost assistance programs

Atlanta Housing Homeownership Program offers down payment assistance of up to $25,000 to buyers within the City of Atlanta who haven't owned a home in the past three years.

Buyers must meet income eligibility requirements and complete an 8-hour home buyer education class to qualify. The program limits property purchases to a maximum price of $335,000.

First-time home buyer loans

Loan type	Min. down payment	Min. credit score	Max. debt-to-income level
FHA	3.5% \| 10%	580 \| 500–79	43%
USDA	None	Varies by lender	41%
VA	None	580	41%
Rental	1–2 months rent	680	33%
Conventional	20%	620	45%

» LEARN: Improve your credit score to expand your borrowing options

FHA loans

FHA loans are popular among first-time home buyers because of the lower down payment and flexible credit requirements. It's an option if you don't have significant savings or a high credit score, but keep in mind that FHA mortgages have strict requirements and fees, such as mortgage insurance premiums.

USDA Rural Development Loans

USDA loans can provide zero down financing for home purchases in rural areas and down payment and closing cost assistance. The downtown and heavily populated regions of Atlanta don’t qualify, but many places outside the city are eligible.

VA loans

This government-backed mortgage option offers 0% down financing for veterans, active service members, and surviving spouses.

Free resources in Atlanta

Local housing counselors

Local housing counselors can help you make informed decisions about your housing options. You can get unbiased opinions about the rent-to-own market in your area and advice on other valuable resources to help you achieve your housing goals.

» FIND: HUD-approved housing counseling locations in Georgia

Housing education programs

The Atlanta Housing Authority provides housing assistance to low-income families and individuals through vouchers, affordable public housing housing, and a range of other community services. It also offers a housing education program to help families prepare for homeownership.

The Georgia Dream Program, offered by the Georgia Department of Community Affairs, offers free home buyer education and money management courses.

Why you should trust us

Our experts

Paige Grove, an associate real estate broker serving the Atlanta metropolitan area. Grove has over 30 years of experience, and her team sold over $71 million worth of homes in 2021.
Steve Nicastro, a real estate professional who has advised numerous clients on whether rent-to-own housing is a good option for them. His expertise helped us provide a more in-depth understanding of the rent-to-own process.

Why Rent-to-Own Mobile Homes Might Not Be Your Best Option

Amy Beardsley — Wed, 05 Apr 2023 00:20:18 +0000

Rent-to-own mobile or manufactured homes may seem like an affordable route to homeownership. But the reality is that rent-to-own mobile homes add more risk to an already dangerous business model. Lower-cost alternatives can likely provide a more profitable and clearer path to homeownership.

Key takeaways

Both rent-to-own and mobile homes are high-risk alternatives to traditional homes.
Rent-to-own agreements apply only to the home, not the land it's on.
Mobile homes are often classified as personal property and can't be financed with a mortgage.

Semya-Moya can match you with experienced real estate agents who can give you market-specific advice and tips.

Why mobile rent–to-own homes are a bad choice

Low success rates

Rent-to-own agreements tend to be expensive in the long run and may not even work out for you. We found that as few as 50% of rent-to-own customers can actually purchase the home they had been renting.

The success rate gets even lower for mobile homes, which are already considered poor investments. Adding on a costly rent-to-own agreement only further reduces the returns.

Less appreciation

Mobile homes have one-fifth the value of a single-family home, and while they don't lose value, their value depends more on their location than on factors like number of bedrooms. That may not be an issue by itself, but the fees you'll pay as part of a rent-to-own agreement can make the total long-term cost much higher.

In addition, the land on which you have your home tends to have higher value and a steadier appreciation. Without the land purchase, the mobile home may not rise in value enough to justify the high costs of the rent-to-own agreement.

⚠️ Warning

Read up on who owns the land where you want to buy. In recent years, renting or owning mobile homes in privately owned parks has led to rising rents, hidden costs, severe restrictions on making modifications to the home, poor living conditions, and the potential for being evicted — all without due process. "Investors are Buying Mobile Home Parks. Residents are Paying a Price" Accessed March 6, 2023.

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Harder to sell

Even if you end up owning the property, reselling a mobile home is often more difficult than a traditional home. Roughly half of all loan applications for the purchase of manufactured homes get denied, compared to just a 7% rejection rate for site-built homes, according to PEW Research.

The people who are interested in buying often have difficulty getting approved for financing. So potential buyers have to explore non-traditional, expensive financing options, which can complicate or stall the home sale process.

👋 Get free advice from a licensed expert

If you're looking to buy or sell a house and weighing your options, Clever can help!

Our fully licensed Concierge Team is standing by to answer questions and provide free, objective advice on how to get the best outcome with your sale or purchase.

Ready to get started?

Give us a call at 1-833-2-CLEVER or enter your basic info below. Our Concierge Team will be in touch shortly to help.

Remember, this service is 100% free and there’s never any obligation.

Rent-to-Own Contracts: What You Need to Know

Amy Beardsley — Wed, 05 Apr 2023 00:17:51 +0000

Rent-to-own contracts let you rent a house now and buy it later, often within three to five years. They can be attractive if you want to buy a specific home but aren't financially ready yet, as they give you time to improve your credit and save up for a down payment.

But rent-to-own contracts should be approached with caution. The agreements often contain confusing terms and conditions, and some may require you to buy the home even if your circumstances change.

Before signing a rent-to-own contract, consider the various risks and seek the help of a real estate professional to clarify any confusing terms.

» SAVE: Buy with Semya-Moya, get cash back after closing!

Rent-to-own agreements, explained

Rent-to-own contracts fall into two types: lease-option agreements and lease-purchase. Both allow you to rent a property with the option to buy it down the road, but a lease-option is more flexible.

Lease-option

A lease-option provides the option to purchase the property at the end of the lease term, but you're not obligated to buy it. Because it's the most flexible rent-to-own contract, a lease-option works best if there's a reasonable chance you'll move before the rental period expires.

If you end up not buying, the option simply expires and you can either keep renting or move out. But you'll probably still be on the hook for some kind of termination fee.

Lease-purchase

Under a lease-purchase agreement, you're required to purchase the property at the end of the lease term, usually at a predetermined price. Typically, you pay higher rent, with a percentage being applied toward your future down payment.

A lease-purchase may work if you're in love with a particular home and area, and don't have any plans of moving shortly. But if you don't go through with the purchase, you can lose all your home savings and risk a lawsuit from the landlord or rent-to-own company.

» MORE: How do rent-to-own homes work?

Key factors to consider

Length of the lease agreement

The lease period usually lasts one to five years. Make sure you have enough time to prepare your finances and that your lease length aligns with your timeline for purchasing a home.

Monthly rent and predetermined purchase price

In some rent-to-own contracts, you pay a higher monthly rent because a portion gets saved toward your future down payment. Your agreement may set a predetermined purchase price for the home, which should take local market conditions into account.

Find out whether the purchase price is fixed or negotiable in the future. For example, if real estate prices fall, you may be locked into paying more than the market value for the home.

Fees and up-front costs

Rent-to-own agreements often include an option fee for the right to buy the home at a future date for a specified price. It’s due at signing or may be renewed over the course of the lease.

The cost is typically 1% of the purchase price, though it can be as high as 5%. The median home price at the end of 2022 was $471,200, so your option fee could range from $4,712 to $23,560.

Termination fees

If you don't (or can't) buy the property at the end of the option period, you may need to pay a termination fee, which can be a flat amount or around 3% of the would-be purchase price — $14K on a median house.

A lease-option agreement usually lets you walk away with minimal financial impact. But depending on the contract terms, you might lose your option fee or be sued for breach of contract if you don’t buy the property at the end of the lease term.

Rights and responsibilities

Knowing who's responsible for the cost of repairs during your lease period can get murky. For example, you may be responsible for common fixes, like a leaking kitchen sink or a broken dishwasher, while the property manager covers more expensive issues, like HVAC maintenance.

In addition, your rental agreement should cover:

If you can make cosmetic changes, like painting and switching out fixtures
Penalties for late payments, such as late fees or interest
If you can have pets, what kind, and how many
If you can host long-term guests or large parties
Who pays property taxes

Property taxes

In a traditional rent-to-own agreement, the landlord or company is responsible for paying property taxes, since ownership of the property doesn’t transfer to the tenant until they exercise their purchase option (i.e., until you buy the home).

You may be responsible for property taxes if the IRS treats your agreement as owner financing, or "an installment sale." This could mean:

Your monthly rent is unusually high for your area. Part of your rent payments goes toward building up equity in the home or your future down payment.

🏡 Searching for rent-to-own homes but feeling overwhelmed? Clever connects you with top local agents who will help you understand the contract and negotiate favorable terms. Buy with a partner agent, and you can qualify for cash back after closing. Get started today!

How to negotiate a rent-to-own contract

Rent-to-own companies tend to be pretty rigid with their requirements, but you can still tailor the contract. If you find a homeowner or independent landlord willing to enter into a lease-option or lease-purchase agreement, here are some tips to help you negotiate.

Research the market: a comparative market analysis (CMA) of recent home sales in the area will give you an idea of the property's fair value — and if the purchase price and rent are reasonable.

Fine-tune the terms of the agreement: lease length, option period, purchase price, how to buy the property, and what happens if you want to walk away.

Share a copy of the signed agreement with your realtor or attorney, and get any changes to the agreement — even minor ones — in writing.

Get advice from a pro: an agent can run a free CMA, help you negotiate more favorable rent payments and purchase prices, and line up other options.

More to consider

The post Rent-to-Own Contracts: What You Need to Know appeared first on Semya-Moya.

How to Rent-to-Own a Home With Bad Credit

Amy Beardsley — Thu, 23 Mar 2023 23:17:24 +0000

How to qualify | Your options | Alternatives | The bottom line

Here's some good news: less-than-perfect credit (a FICO score of 580 or lower) doesn't need to hold you back from your dream home.

A rent-to-own property, also known as lease-to-own or lease-option, allows renters to live in a home while working to improve their credit score for a future purchase at the end of the lease. Companies like Dream America offer rent-to-own options with a credit score as low as 500 and Verbhouse requires no down payment.

However, it's not your only choice for buying a home, and you may be better off renting and saving while you take steps to improve your credit and finances. For example, conventional mortgages require a minimum credit score of 620, while an FHA loan with a 3.5% down payment requires a minimum of 580.

Before diving into the world of rent-to-own homes, take the first step by checking your credit score and reviewing your credit reports. Most rent-to-own companies or landlords require a minimum credit score (Get your free credit report every 12 months from AnnualCreditReport.com).

How to qualify for rent-to-own with bad credit

Traditional home purchases may require a high credit score, but rent-to-own home programs may have more flexible credit requirements. Credit score is just one factor in the approval process, with other criteria to consider.

For example, a rent-to-own agreement may require a minimum income of $2,500 to $5,000 per month with at least three-month employment history. You may not be eligible for certain programs if you have delinquent rent, evictions, foreclosures, or bankruptcy filings in your past.

"These criteria include having a steady income stream and a history of responsible payment on debts," says John McConnell, a nationally recognized Credit Expert and Specialist in Personal Finance.

Rent-to-own programs for people with bad credit

Here's a breakdown of some popular rent-to-own programs and their credit score requirements.

Home rental company	Minimum FICO	Down payment
Divvy Homes	550	1–2%
Dream America	500	$5,000
Trio	580	None
ZeroDown	540	2-3%
Home Partners of America	580	None

Dream America has one of the lowest credit score thresholds for rent-to-own homes. It also allows a generous debt-to-income ratio of up to 50%, while most mortgage lenders typically ask for less than 36%.

Despite its name, ZeroDown requires a down payment of 2–3%. That's on par with some government-backed loans, which may offer a better path to homeownership.

Divvy Homes has a low minimum income requirement of $2,500 per month. But we don't recommend using Divvy if you have other options available.

Home Partners of America's minimum FICO score ranges from 580 to 620, depending on the market and type of agreement. Be aware that in 2021, only 26.4% of its customers with a credit score of 620 or lower were successful in achieving homeownership.

Can I find rent-to-own homes near me with bad credit?

Yes, you can! Learn how to find rent-to-own properties.

Alternatives for home buying with bad credit

Buy a house with an FHA or VA loan

One option is to apply for an FHA loan, which allows for a minimum credit score of 500, but with a down payment of 10%. You can qualify for a lower 3.5% down payment if your credit score is at least 580, although some lenders might have stricter requirements.

Another option is a loan offered through the Department of Veterans Affairs. The VA loan program doesn't have a minimum credit score requirement, but VA lenders may.

To find the best option for you, shop around at different lenders to compare credit score qualifications and other eligibility requirements.

Contact a housing assistance program

Many states and municipalities offer programs specifically designed to help first-time home buyers with financial assistance, including down payment assistance, and low-interest loans.

The Department of Housing and Urban Development (HUD) also offers a variety of homeownership assistance programs and the Good Neighbor Next Door program, which offers a 50% discount to law enforcement officers, teachers, and firefighters.

Many areas also have local or community-based organizations that help home buyers. Visit your municipality website and search for housing assistance or grants to see what’s available.

» FIND: Homeownership assistance programs by state (HUD)

Work on improving your credit

Start by reviewing your credit report for errors and inaccuracies that may hold your score down.

Request a free credit report from AnnualCreditReport.com, where you can get a copy of your report from the three credit bureaus (Experian, TransUnion, and Equifax).

Make sure your report is accurate and complete. Check for errors such as incorrect names, addresses, or accounts that have been closed but listed as open or misreported as late or delinquent.

"It’s important to review your credit report regularly and dispute any inaccuracies that may be present," says McConnell. He then suggests several steps to quickly improve your chances of being approved for a rent-to-own agreement or mortgage loan:

Pay down existing debt. Reducing credit card debt and other consumer debt lowers your overall debt load and frees up more money for other expenditures.
Make timely payments. Late payments can adversely affect your credit score and make it more difficult to secure approval from lenders.
Increase income. See if you can take on additional work hours at your current job, or find part-time work. Increasing monthly income can help improve your debt-to-income ratio, which may give lenders greater confidence in approving applications with larger loan amounts.
Build savings accounts. Boosting your savings is another way to increase lenders' chances of approval. An emergency fund assures the lender that you'll be able to cover costs if something comes up without needing further assistance.

Another strategy to consider is requesting a rapid rescore from your lender. This process can improve your credit score quickly, typically in a few days. Ask your lender if they offer this service.

Bottom line

Improving your credit score overall will help you secure lower interest rates and save you a ton of money in the long run. If you have poor credit, rent-to-own homes can let you live in the home you plan to buy while you work on building up down payment savings and finances.

» LEARN: 28 Creative Ways to Save for a Down Payment

Before entering into a rent-to-own contract, research your options and consult with financial experts, such as local realtors who specialize in these types of agreements. They can provide guidance and advice to help navigate the process and avoid potential pitfalls.

More to consider

The post How to Rent-to-Own a Home With Bad Credit appeared first on Semya-Moya.

Rent-to-own Pitfalls: How to Avoid Getting Stuck in a Bad Deal

Amy Beardsley — Thu, 23 Mar 2023 23:16:46 +0000

Rent-to-own homes seem like a great deal on the surface. You can move in and start making payments toward the purchase price without applying for a mortgage. But the truth is rent-to-own is not for everyone and comes with various pitfalls.

Here’s what to look for when evaluating rent-to-own homes, including potential pitfalls and how to avoid them. We break down five key risks to watch out for and provide you with the knowledge you need to make a smart decision.

Rent-to-own is complicated. Clever will match you with an experienced local buyer's agent to help you understand how rent-to-own works, and find the best housing options in your area. Get started today!

5 key rent-to-own pitfalls to consider

Rent-to-own homes come with confusing contract terms, which often vary by company or landlord. Above all, remember that you don’t own the property during the lease period. Here are some common risks to be aware of.

They're expensive

Lower up-front costs can make a rent-to-own seem like a good deal. But it can actually be more expensive in the long run for a few reasons:

Compare these costs against the costs of a traditional rental or mortgage before signing a contract.

They lack flexibility

Since you won't own the home until you buy it at the end of your lease period, you'll be subject to the same rigid restrictions as a traditional rental. Obviously, you can't anticipate everything: no one ever expects to get laid off, total their car, or suffer a debilitating injury or illness. But you won't be able to make any changes to the property, and breaking the lease would carry a hefty penalty.

For example, if you need more space because you're working from home, you have children, or a family member moves in, you may not be able to convert the garage into an extra room. Or if someone in your household suffers an injury, your contract may prevent you from adding an accessibility ramp, even temporarily.

In addition, if you decide not to purchase the home — maybe because you get a job in a different city and need to work on-site — then you could lose the money you've already put into the home and even have to pay a termination fee.

You can still get evicted

Just like any rental contract, your lease-option agreement will likely stipulate terms and penalties for late or missed payments. If you don't pay rent by a certain date, you may be subject to late fees. And if you miss payments entirely, your landlord or rent-to-own company can file an eviction order against you.

Finding yourself in an eviction situation doesn't just jeopardize your immediate housing status: the eviction filing alone can hurt your credit and make it harder to get approved for a rental lease or loan in the future — even if the eviction isn't ultimately carried out.

If you're concerned you may miss a payment, consider taking the following steps:

Check your contract so you understand the potential penalties (some companies actually offer support and flexible payment options if needed)
See if your state or municipality offers any protections or financial support for renters that might apply to your situation
Let your landlord or rental company know (better to be up-front — they're going to find out anyway)

Being proactive and getting out in front of the problem is always a smart thing to do. You may be able to file for unemployment, get a rent moratorium, or negotiate an adjusted payment schedule with your landlord (e.g., 2x/month).

Eviction processes laws vary by state or city, so connect with a local real estate professional for more specific advice.

» SEE: Landlord–tenant laws by state

Your home's value could fall

A rent-to-own agreement locks in the home's future purchase price, which poses a risk if the market crashes. The value of your home could fall below your agreed-upon purchase price, leaving you to pay more than what the home is worth.

However, your home's value could go up or down with a traditional mortgage, too, so you should be comfortable taking that risk either way.

You have a limited selection of homes

It can be hard to find a home that fits your needs and budget. There just aren't as many rent-to-own listings available as traditional homes and rentals, so your options are limited.

Many rent-to-own companies also don't allow condos, homes in or near flood zones, or homes on more than two acres of acres of land, which may reduce your options further.

» LEARN: How to Find Rent-to-Own Homes Near Me

How to avoid a bad rent-to-own deal

1. Review your finances

See if you can afford or qualify for a rent-to-own agreement now. Generally speaking, rent-to-own isn't a great fit if you're living paycheck-to-paycheck or don't have a stable, long-term employment situation.

Consider the higher rent payments, other costs, and whether you can secure financing by the end of the agreement. Speak with a financial adviser or lender for more specific advice to help you plan ahead.

2. Research and compare different options

Shopping around different rent-to-own options — whether companies like Divvy Homes, Trio, Landis or a homeowner listing — helps you understand your ranges of terms, costs, and potential risks so you can make an informed decision.

We recommend working with a realtor who has direct experience helping clients choose between rent-to-own housing options. A realtor can also determine a home's value by doing a comparative market analysis (CMA) to make sure you're getting a fair deal.

3. Thoroughly review your rent-to-own contract

A rent-to-own contract is a legal agreement, so you must carefully read and understand the terms and conditions before signing. This is where a realtor or attorney can provide a lot of value: they can help you spot hidden fees, unfavorable terms, or anything unclear.

It's also smart to get a home inspection on the property before entering into the agreement. You can identify likely complications with the property and negotiate repairs or maintenance before signing the contract.

👋 Next Steps: Talk to an expert!

If you're weighing your options for buying or selling a house, Clever can help!

Our fully licensed concierge team is standing by to answer questions and provide free, objective advice on getting the best outcome with your sale or purchase.

Ready to get started?

Give us a call at 1-833-2-CLEVER or enter your info below. Our concierge team will be in touch shortly to help.

Remember, this service is 100% free and there’s never any obligation.

The post Rent-to-own Pitfalls: How to Avoid Getting Stuck in a Bad Deal appeared first on Semya-Moya.

How Much Do You Lose Selling a House As-Is?

Amy Beardsley — Fri, 27 Jan 2023 21:49:42 +0000

How as-is sales work | How much do you lose | Factors | FAQs

Depending on how you sell your home and its condition, you could lose 5% to 50% by selling it as is. If it's in good shape, you might get 95% of its fair market value. If it's in shambles or you need to sell ASAP, you might only get half its worth.

There's no simple answer. For some homeowners, pre-listing repairs are costly and time-consuming but net a higher profit. Yet for others, listing a home in as-is condition is the more convenient choice, even if it results in a lower profit.

Is it worth selling your home as-is?

Selling your home as-is can be more convenient, but also more expensive in the long run.
It might be the best option for attracting a home buyer looking for a quick cash transaction.
Most traditional buyers look for move-in ready homes, so you’d likely need to make repairs or upgrades to maximize the sale price.

» TRY CLEVER: Match with top agents, get a free home valuation, and save thousands in realtor commissions!

How an as-is sale could work

Buyers might factor in the repairs they'd have to make themselves into their offers, so the better shape your house is in, the higher the offer. If it's in major disrepair, some buyers — like investment companies — will only pay 50–70% of its after-repair value (ARV).

An as-is sale can save you time and money up front by getting the property listed more quickly, but can also work against you by discouraging buyers and prolonging the sales process.

👋 Get a free comparative market analysis!

Match with top-rated agents from brand-name brokerages, like Keller Williams and RE/MAX, and request a free CMA today! Sellers will save thousands in realtor commissions with pre-negotiated 1.5% listing fees.

Clever's service is 100% free with zero obligation. Interview as many agents as you like until you find the perfect fit — or walk away at any time.

How much do you lose selling a house as-is?

You could lose about 5–30% by selling your home as-is, depending on its condition and what repairs the buyer will need to make. So on a home valued at $350,000, you could lose anywhere from $18,000 to $105,000.

While there isn’t a strict formula for how much an as-is sale will get you compared with a traditional sale, you can expect to lose approximately:

5% for a move-in ready house
10% for a house that needs minor repairs
30–50% for a house that needs serious repairs

Basically, don’t expect to get top dollar when you sell a home as-is. Pre-listing repairs and upgrades will typically add value.

» SEE: The Best (and Worst) Home Improvements for Resale Value

What percent do you lose when selling a house?

ARV 👉	$175,000	$350,000	$525,000
<5%	<$8,750	<$17,500	<$26,250
10%	$17,500	$35,000	$52,500
30–50%	$52,500-87,500	$105,000-175,000	$157,500–262,500

Factors that can affect sale price

Your home's condition

Your sales price will frequently depend on your home’s condition. If your property needs serious and costly pre-listing repairs, you’ll likely lose more than a home requiring cosmetic fixes. If you don’t have the time or money to invest in repairs, your final sales price may reflect that.

Minor issues that can be fixed with a quick call to a local contractor, like a leaky faucet, could attract more buyers and help you get a bigger profit. Larger problems — e.g., a faulty water heater, roof leaks, or a nonfunctional HVAC system — can significantly impact your sales price since they cost hundreds (or thousands) of dollars to fix. You may need to make improvements to grab the attention of buyers.

✍ Be aware of inspection contingencies!

Even in an as-is sale, a buyer can still have an inspection contingency, which lets them cancel the contract if a home inspection uncovers a major issue.

Who buys your house

The average buyer isn’t looking for a home that needs repairs. However, one in three home buyers would consider purchasing a fixer-upper if they got a great deal. "Homebuyers Swarm to High-Risk, High-Reward Fixer-Uppers in Red-Hot Market" Pages 1. Updated February 11, 2023. Accessed February 11, 2023.

View All Sources">[2]

Generally, though, homes with serious issues are more likely to attract investors and companies that buy houses for cash. These buyers offer a quick sale, but they often pay 70% or less of the home’s ARV, which represents the property’s value after renovations are complete rather than in its current state.

How strong the housing market is

A seller’s market — few homes for sale and high demand — gives you a stronger position to list the property at a higher price. On the other hand, a slower market (more available housing than buyers) can decrease your home's value.

If your home takes longer to sell, you may need to set a low sale price to attract traditional buyers to your home, regardless of its condition. A local realtor can recommend a fair price based on your market.

Clever can match you with a local, qualified realtor to help you decide. They'll discuss your home's value and give you insight into estimated repair costs, and whether pre-listing repairs make sense for your property.

Get fair offers from cash home buyers now!

Compare offers from top cash buyers, plus get an expert realtor's opinion on what your house is worth.

FAQs

What does it mean to sell your house as-is?

Selling as-is means you list your home for sale in its current condition. An as-is listing tells potential buyers that what you see is what you get, and you won’t make any repairs or improvements to the property.

Is it better to fix up a house or sell it in as-is condition?

If you need to sell fast, an as-is sale might be your best bet. It’s a great way to get a quick sale, and you can schedule closing in as little as a few days in some circumstances. But if you have the time and money for repairs and upgrades, then investing in the property could result in a higher price.

Can you sell a house as-is without a buyer's home inspection?

Buyers can always request a home inspection, even in an as-is sale. And you're required to disclose any information that might negatively affect the home’s value.

The post How Much Do You Lose Selling a House As-Is? appeared first on Semya-Moya.

Above-market rental rates, even as a portion of that may go toward a down payment fund	Non-refundable option fee (1–7%), which may be a one-time or annual cost
Termination or move-out fee (1–3%) if you don't buy the home at the end of your lease period	Repairs and maintenance (1–2%), which often aren't covered by rent-to-own companies
% of the home's value

Amy Beardsley, Author at Semya-Moya

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