1. What is Rent-to-Buy Real Estate?

Rent-to-buy (or lease-to-own) is an agreement where you rent a property with the option to purchase it later, typically after 1-3 years. Part of your rent payments may go toward the eventual purchase price.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( Purchase\ Price \) — Total property price in USD
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Term in months (24 in this calculator)

Explanation: This calculates the fixed monthly payment needed to fully amortize the loan over the specified term.

3. Importance of Payment Calculation

Details: Understanding your potential monthly payment helps assess affordability and compare different rent-to-buy options.

4. Using the Calculator

Tips: Enter the total purchase price and annual interest rate. The term is fixed at 24 months in this calculator. All values must be valid (price > 0, rate ≥ 0).

5. Frequently Asked Questions (FAQ)

Q1: What's included in the purchase price?
A: This should be the total agreed purchase price of the property, excluding any option fees or non-refundable deposits.

Q2: How is the interest rate determined?
A: The rate is typically set in the contract and may be higher than standard mortgage rates to account for the option.

Q3: Can I change the term from 24 months?
A: This calculator is specifically for 24-month agreements. Other terms would require different calculations.

Q4: Are there additional costs not included?
A: Yes, property taxes, insurance, and maintenance costs are typically separate from this base payment.

Q5: What happens at the end of 24 months?
A: You typically must exercise the purchase option or forfeit any accumulated purchase credits.