Is a Rent To Own Agreement Best for You?

By: ROS Team

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Homebuyers typically need a home loan, or mortgage, to purchase a new home. A good credit score and a decent cash reserve for a down payment are also necessary. However, there is an alternative, less-known option available to most buyers: a rent to own contract.

A rent-to-own agreement gives you the option of living in the property as a tenant with the option to buy it before the lease term expires.

Let’s weigh some of the pros and cons of a rent to own agreement:

Pros of Rent To Own Agreement

  • Tenant-turned-buyers can essentially lock in a home at the current cost.
  • It allows buyers who otherwise wouldn’t qualify for a home loan the opportunity to be homeowners while simultaneously improving their credit score as a tenant.
  • Buyers can experience the house and neighborhood without the pressure of committing to buying the property.
  • There are no moving expenses should the tenant decide to purchase the house.

Cons of a Rent to Own Agreement

  • Tenants who choose not to buy the rental house lose all money paid towards the mortgage.
  • Rent to own property agreement terms are long, meaning it is a very slow process to transition from tenant to prospective buyer.
  • You don’t have any actual ownership until you complete the purchase process. Until then, you’re bound by the rules and restrictions of the homeowner.
  • Making late payments could ruin your chances of having the option to purchase the house, especially if it violates the terms of the rent to own agreement.

Read Also: Rent To Own Homes

Rent to Own Contract Templates

The rent to own contract is executed by and between the parties:

Landlord’s name [Property’s  Address]

Tenant/buyer’s name [ Current Address]

Whereas, description of a property located at [ address] is as follows:

Description( total area, covered area, parking space, title number, etc.)

Whereas the tenant and landlord desires to lease the property mentioned above

Whereas the tenant desires to buy the property under the conditions given herein by the landlord for the tenant to purchase the property.

Therefore, in consideration of the obligations contained here, the parties agreed to the following:

Lease Term

The landlord agrees to lease the property to the tenant on [date].

Lease Rent

The landlord agrees to lease the property at an amount of [monthly rent ] and shall continue on a month-to-month basis which shall be paid at [landlord’s address].


Utilities and other bills of operation and maintenance are in the scope of the tenant.

Security Deposit

The tenant shall pay a refundable one-time amount of [dollar amount] for the term of the lease, which can be used to maintain any damage caused by the tenant during the term of the lease. Upon termination of a lease, the landlord shall return the security deposit within but not more than 45 days.

Structural Changes

No structural changes or modifications can be made without prior permission of the landlord.


Tenants cannot keep flammable, dangerous, or toxic material that jeopardizes the community’s safety.

Purchase Property Option

In this agreement, the landlord offers the tenant an option to buy the property for the total price of [ total price] subject to the following conditions:

Purchase Option Time

The period to buy the property starts on [date] and ends on [date]

Return of Deposit

The landlord shall refund a security deposit to the tenant within or no more than 45 days from the day lease expires.


Regular maintenance of wear and tear during the lease duration is the responsibility of the tenant.

Option Money

In consideration of the purchasing option, the tenant agrees to pay a non-refundable [amount] to the landlord at any time during purchase period time. The amount shall be adjusted in the purchase amount of the property.

Not Availing the Option to Purchase

If a tenant does not exercise the right to purchase the property, the lease of the property shall remain intact, and the property is returned to the landlord upon expiry of the lease.

Exclusive Right to Purchase

The right to purchase the property is an exclusive and non-transferable option. Only the tenant herein the agreement can exercise the right.

Governing Law

The agreement shall be interpreted, governed,  and construed according to the legal system of [name of state].

Tenant’s Signature                  Landlord’s Signature


Rent to own agreement allows tenants the opportunity to save money towards purchasing a home of their own. It also affords them time to improve their credit score before applying for a home loan. Always consult with a real estate agent or attorney before signing a rent to own agreement.

Read Also:

One Page Rental Agreements – Complete Guide
Exclusive Right to Sell Agreement
Complete Guide for Cash for Keys Agreement
All You Need to Know About Roommate Agreements
Tips on Using One Time Showing Agreements