How To Make A Decision On Your Down Payment In A Rent To Own Situation

For rent to own homes for sale, there are many unique challenges and opportunities in financing the actual purchase of the home. One of those unique opportunities is the ability to include a down payment in a monthly rent credit fee paid over a long period of time. In other words, you can actually stretch out the down payment over the length of the contract in part or in full.

The major reason that people borrow money, whether it is for a car or for rent to own homes, is simply because they cannot currently afford the lump sum value of the home but still want to make that purchase. For many who involve themselves in a rent to own financing option, this is taken a step further.

As discussed in many of the other articles within this site, the rent to own finance option allows you to lengthen that time required before making a down payment or making a full commitment on the house.

One of the major decisions in purchasing a home, whether using the rent to own homes for sale model of financing or not, is how much to put down for a down payment on the home. It is well known that the best rates on mortgage loans can be had when the down payment is at least 20% of the overall home purchase price. But not everyone can afford that 20%.

One of the things to consider is your own stability in terms of geographical movement when purchasing a home.

Why is this so important?

Because if you put down a very large down payment, say for example 20%, and you have the tendency to move every few years the larger investment as a down payment makes less sense than if you were to have a smaller down payment and simply pay a higher interest rate in the beginning.

Think of it this way; if you are only required to pay a down payment and then pay a mortgage based off of the interest rates that the loan has provided you, and the loan and the down payment are directly related, it would make sense to simply lessen the down payment as an upfront payment, knowing in advance that you will leave after a short amount of time, and simply eat the cost in the monthly mortgage payment which will end up being much less expensive.

If you are someone who has an emergency financial cushion that would not withstand a large down payment, this also makes sense to avoid paying a 20+ percent down payment. You do not need to put yourself in an emergency financial situation just to get a half percent lower interest rate. It just isn’t worth it.

Particularly with the rent to own homes financing option, you should consider tax implications on your future mortgage. It is certainly true that mortgage interest is actually tax-deductible, you need to do the math and find out if the interest rates that you are receiving on the mortgage match the deductions that are possible as tax breaks.


Rent to own homes for sale are fantastic opportunities for many future homeowners. Being able to navigate through the sometimes confusing and complex world of obtaining a mortgage, and purchasing a home will allow you the confidence that you need to move forward in making your dream home purchase.