Rent to Buy is another name for lease to own with the option to purchase and is a method that enables many people to buy their home earlier than waiting for enough time to pass to build up a better credit score to qualify for a loan or if you are already qualified but need time to save enough money for a down payment plus closing costs. 
First you want to find a property that you would like to rent that seller will entertain a rent to own contract.  Then, you are going to need to put a deposit down on the property. This deposit will be agreed to by the owner and the buyer together, and it can be as small or as big as both parties agree. You need to know that a smaller deposit will cause bigger monthly rent payments, while a bigger deposit will allow you pay less for the monthly rent. 

The rent you pay to the owner may be used to cover the seller’s mortgage payment, property taxes, owners insurance, and renters insurance, profit if any after expenses.  You will also have to take care of all repairs.  You and seller may agree to apply some of the payment for a future down payment once you exercise your option to purchase or you may include more money for your payment that this more money will be available to you to be used as a down payment.  Some repairs may have to have the permission from owner, i.e. such as paint colors, replacement materials etc (this will be addressed in your contract option to purchase). Remember, you will have money set aside from seller as a credit to your purchase price and the deposit as long as you exercise your rent to own option within the time frame allowed in your contract with sellers.  
If you elect not to exercise your option to purchase you will lose your deposit.  You will still get back your down payment money that was agreed to in the contract if the property was left in at least the same condition as to when contract rent to own started.  Remember in this article I am using scenarios that may or may not be applicable to the contract you have agreed to.  You (buyers) will have to check out your contract for exact terms and conditions to your rent to own or lease to own with the option to purchase.  
Very Important
Be sure you understand all terms and conditions in rent to own with option to purchase, in fact I would advise you to hire a real estate attorney to view the negotiated contract before signing.  I can’t emphasize enough to use a Real Estate Attorney not just any attorney.

Once you are able to get you own lending this usually reflects in smaller interest rates which will possible mean lower monthly payments. 
Below is an example of a Rent to Buy:
We have this couple, Rhonda and Bret, who recently bought their first home with us.  Both of them were recent college graduates.  Although they were both employed and had decent salaries, they still needed to wait 2 or 3 years in order to become eligible for a discounted mortgage rate. They had managed to raise $10,000 from their personal savings and also had a little help (must be gifts) from their family and friends.

They found their dream home: a 6-year old, three bedroom house in Boise, Idaho, situated on quite a large lot of land.

These are examples only:  Rent to Own with option to purchase
- Purchase price: $220,000
- Initial deposit: $10,000
- First and last monthly rate installments: $2,200
- Monthly deposit to be used as a down payment once option to purchase is exercised: $150
- Monthly property taxes to be paid: $250
- Mandatory insurance (monthly installment): $40
- Renters insurance monthly: $20
- Monthly payment- $1560.00

It will take 5 years for the couple to build up their monthly deposit and be able to buy the house outright. Here are the figures:


Year 1: $1,800
Year 2: $3,600
Year 3: $5,400
Year 4: $7,200
Year 5: $9,000

After five years, they are going to have $19,000 including deposit for down payment and closing costs, so they are going to need a smaller mortgage than in the present.

If they wanted to do this within a 2-year time frame, they would have had only $13,000, which means a 6% deposit for their mortgage.

We hope this scenario is clear enough for you to understand how a Rent to buy option can help you own a house with less hassle and a smaller financial burden on your shoulders.

Home with Options can help you through the entire process of Rent to Buy or rent to sell or lease to own with option to purchase, so that you can negotiate the best possible deal and enjoy a smooth and hassle-free process.
Try to negotiate in your contract to get the seller to pay all your buyers closing costs once you exercise your option.  Then in five years you will be able to use all $19,000 plus any additional money you may have saved for a down payment.