Lease with option to buy

Mortgage and Lending with Source 1 Mortgage

A lease with option to buy allows a renter to purchase a home after at least 12 months or more of timely payments made through a checking account to the seller.  A buyer usually enters a lease with option to buy with a small down payment and a negotiated purchase price of the home upon the maturity of the lease contract.  Sometimes the seller will also credit a monthly portion towards building equity within the home. The bank will treat this as a purchase with prior credits for down payment. It is a win win scenario.

Buyer Benefits:

  • allows monthly buildup of equity
  • allows the buyer time to repair credit for bank financing
  • allows the buyer to find another home without purchasing if they exit pior to contract maturity
  • allows the buyer to try out the home prior to purchasing

Seller Benefits:

  • home is sold faster during a slow market
  • the home is usually sold at a higher price than a normal transaction
  • upfront cash to seller
  • the buyer will have greater interest in upkeep compared to a renter
  • option from buyer can pay Realtor's commission upfront


P.S.  A buyer should always have their credit reviewed with a bank prior to entering into a lease with option to buy in order to repair any credit issues prior to obtaining financing upon contract maturity.

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