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Do I Need a Bigger Deposit to Move In (Rent to Own)?

by | Jun 17, 2022 | Rent to Own

Do I Need a Bigger Deposit to Move In (Rent to Own)?
Buying a home can be tough for those who have a bad credit rating or little money. But not all hope is lost.

There are alternative routes to traditional home ownership. Rent to own homes are incredibly popular with people who want to live in their own homes but don’t want to pay the high price they are required to pay upfront.

You’d be stunned how many people quickly and easily qualify for a rent to own home. You should click here to see if you qualify before going any further– you’ll be glad you did.

Now, if you’re thinking of buying a rent-to-own house, you probably have many questions. How much of a deposit do I need to move into a rent-to-own home? And what other expenses will I face? These are just some of the questions that should be top of mind when considering buying a rent-to-own house.

What Kind of Deposit Do I Need for a Rent to Own Home?

Most rent-to-own contracts come with a larger, non-refundable deposit than what would be expected of an apartment or house rental. 

Sometimes it can be as much as ten percent of the eventual purchase price; for a $400,000 home, that would be $40,000. Luckily, many sellers are willing to negotiate a smaller deposit upfront if you are willing to work with them. 

Another thing that plays a factor in your deposit is your credit score. There are two things you need to keep in mind.

  1. If you don’t know what your credit score is, do not go in blind, or you’ll regret it. Stop what you’re doing, and click here to quickly and easily find out what your credit score is. Don’t guess– know exactly what you’re working with.
  2. If you already know your credit score, and you know that it could use a little help, don’t hesitate– click here to use our recommended, trusted credit repair service.

This may mean paying more rent overall, but your wallet won’t hurt as much when you are moving into your new home! The size of the deposit you need for a rent-to-own home will also depend on which state you’re in, the local market prices, and the individual property. 

The first thing to look at is the property’s purchase price. The minimum down payment required to get started will typically be a certain percentage of it, but it can vary by area.

For example, when you rent to own a house in an expensive city like San Francisco or New York City, homes sell for much more than in smaller towns, so you’ll need to put down more money upfront. When going over the finer details of the agreement with the seller, offer a higher monthly rent payment in exchange for a smaller deposit. 

Some may say no because they like the high deposits under the guise of getting to keep it if you are unable to secure financing at the end of the rental term.

But a higher rent payment is also an attractive sell to landlords and sellers because that higher monthly rent doesn’t go toward the future cost of the house. 

Most rent-to-own contracts include the monthly rent to be portioned into an agreed percentage to go towards the final purchase of the property. 

The raised base rent amount would essentially go right into the seller’s wallet since it won’t have to be applied to the later sales price. 

If the seller still wants a deposit upfront and will not negotiate a higher base rental payment, offer to make smaller payments on the deposit included in the first few months of the lease agreement. For example, the seller requires a $3,000 deposit. Offer $1500 initially and an extra $250 per month until the other half is paid off. 

At the end of the day, it will be the same amount of money, but you will have the opportunity to pay a small portion over time and not have to fork over a large amount of money at the time of move-in. 

For people looking for a way to get into a house without having to come up with an entire down payment and closing costs, rent-to-own homes are a great option. There really is no official “minimum deposit” you need to move into a rent-to-own home. This will depend on the individual situation between both you and the owner/seller of the house. 

A bigger deposit is supposed to deter scammers and to keep you from skipping town on your rent-to-own agreement. 

It’s a signal to the seller that you’re serious about moving in and making this your home, whether or not you ultimately choose to buy the house at the end of the lease contract. 


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