Why Rent to Own or Owner Financing programs?
If you wish to buy a home but cannot qualify for a bank loan, Owner Financing (also Seller Financing) or Rent to Own (also lease purchase or lease option) programs might be what you are looking for. Banks will not give you a loan if your credit is not perfect, have bankruptcy or foreclosure in the past and/or if you do not have enough money to put down.
The sellers are much more flexible on the financing terms than banks are. They would work with buyers on the monthly payment amounts, qualifications, or even offer down payment assistance programs.
Owner financing or rent to own programs are great for buyers who:
- do not qualify for traditional loans. A seller will most likely ask for your credit report, but the qualification criteria is usually very flexible
- are self-employed or have a new job. Banks require a proof of last 12-24 months income. If you cannot provide that, it is very unlikely that a bank will give you a loan.
- do not have enough money for down payment or to pay closing costs.
- need to move in fast. The loan approval process through the bank can take 30-60 days or more, while with the seller you can close within several days to couple weeks.
