1. What is Rent-to-Own Home Purchase?

Rent-to-own (also called lease-to-own) is an agreement where you rent a property for a specific period with the option to buy it before the lease expires. Part of your rent payments may go toward the purchase price.

2. How Does the Calculator Work?

The calculator uses the rent-to-own payment formula:

Where:

• \( Purchase\ Price \) — The agreed purchase price of the home
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Number of months in the agreement

Explanation: This formula calculates the fixed monthly payment needed to pay off the purchase price over the term at the given interest rate.

3. Importance of Payment Calculation

Details: Calculating accurate payments helps both buyers and sellers understand the financial commitment and ensures the agreement is fair and sustainable.

4. Using the Calculator

Tips: Enter the agreed purchase price in dollars, monthly interest rate as a decimal (e.g., 0.01 for 1%), and term length in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's a typical rent-to-own term length?
A: Most agreements last 1-3 years, giving the renter time to improve credit or save for a down payment.

Q2: How is the interest rate determined?
A: The rate is negotiated between buyer and seller, often higher than mortgage rates to account for risk.

Q3: What happens if I don't buy at the end?
A: Typically you forfeit any extra payments made toward the purchase price unless otherwise specified.

Q4: Are there upfront costs?
A: Most agreements require an option fee (1-5% of purchase price) that may be credited toward the purchase.

Q5: Can I get my rent credit back if I don't buy?
A: Generally no - rent credits are typically non-refundable if you don't exercise the purchase option.