1. What is Rent-to-Own?

Rent-to-own is a housing arrangement where tenants rent a property with the option to buy it at the end of the lease term. Part of the monthly payment may go toward the eventual purchase price.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( Purchase\ Price \) — The agreed purchase price of the home
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of monthly payments (years × 12)

Explanation: This formula calculates the fixed monthly payment required to fully amortize the loan over its term.

3. Importance of Accurate Calculation

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

4. Using the Calculator

Tips: Enter the agreed purchase price, annual interest rate, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's included in a typical rent-to-own payment?
A: Payments usually include principal, interest, and sometimes property taxes and insurance (PITI).

Q2: How does rent credit work in rent-to-own?
A: Some agreements apply a portion of each payment toward the purchase price, reducing the final amount needed.

Q3: What happens if I don't buy at the end?
A: This depends on your contract - you may forfeit any rent credits or option fees paid.

Q4: Are interest rates higher for rent-to-own?
A: Rates are often higher than traditional mortgages due to increased lender risk.

Q5: Should I get legal advice before signing?
A: Yes, rent-to-own contracts can be complex - consult a real estate attorney before committing.