How Does Rent-to-Own Work?

In addition to rent, you pay a one-time deposit plus rent credits. That extra cash helps fund your down payment.
Abby Badach Doyle
By Abby Badach Doyle 
Updated
Edited by Alice Holbrook Reviewed by Michelle Blackford

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In a rent-to-own agreement, you lease a home for a set amount of time before buying it. The process can be a way for people with limited savings to buy homes because the agreement builds in opportunities to save for a down payment. And if you have credit challenges, you can buy some time in the home you want before having to qualify for a mortgage.

The idea sounds simple, but there are downsides. Monthly costs are usually higher than in a simple lease. If you don’t — or can’t — buy the house, you could lose your deposit and possibly face legal consequences. And while many rent-to-own homes are legit, scammers are known to post bogus listings, too.

In short: Rent-to-own is a legitimate way to buy a house — but it usually isn’t your only option. If you’re considering this route, here’s how to feel confident before you sign.

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