How Do Rent To Own Homes Work in Baltimore? – The Process

Rent to own a house can also be called lease to own house or  “lease option.”

So how do rent to own homes work in Baltimore and other parts of MD?

How Does A Rent To Own Home Agreement Work?

This arrangement is similar to a car lease. The renter rents a house from the owner of the house and pays monthly rental fees for living in the house. After a given period of time, usually three years or so, the renter can decide to purchase the house at a price that the renter and owner of the house agreed upon at the start of the rent to own agreement.

Sometimes a fraction of the monthly rent can go towards down payment of the house depending on the local laws and guidelines. Congress passed the Dodd Frank Law which sometimes makes this practice illegal.

The Rent To Own Contract Agreement – How It Works Here In Baltimore

The contract the buyer and seller draw up should be very clear. You should understand the nature and terms of the contract properly before signing it.  Make sure you ask questions if you’re not clear about anything at all.

The Financial Parts Of The Rent To Own Agreement

First, the seller has to set the purchase price and monthly rent for the house.

The Monthly Rent

The purchase price is usually retail value for the house in today’s market.  The monthly rent is usually a bit higher with a rent to own / lease option agreement.


Because you’re paying for the ability to purchase that house at the end of the agreement and you’re locking that house down so others can’t purchase or rent it during the entire term of the agreement.

The Purchase Price

The agreed and signed price and rent is settled and locked during the entire rental period of time, which is usually between one and three years.

The agreed price doesn’t change during the agreement based on market prices in Baltimore, whether they rise or fall.  That’s one of the big benefits of buying a house here in Baltimore with a rent to own… that you can lock in to buy a house at a price today… and not have to buy the house for 1 – 3 years… and that purchase price won’t go up over those years.


The Option Fee / Upfront Payment

There is an option fee that the buyer pays the seller. It is a set amount of money payable to the seller by the buyer before you move into the house. This amount can really vary based on who you’re working with and the house price… but a rule of thumb is usually 1-5% of the total house purchase price is what you can expect to pay upfront to enter the agreement… and this payment is usually non-refundable if you decide to NOT buy the house at the end of the agreement.

This option of buying a house in Baltimore with a rent to own agreement is very good for buyers who would otherwise be unable to purchase a house or whose credit score wouldn’t meet the required threshold for a mortgage.

For sellers like us, the rent to own opens up the potential “buyers pool” so we can help more people get into great homes.

For buyers, it lets you work toward home ownership and have that sense of pride you feel when you own a home.

The End Of The Rent To Own Agreement… What Happens?

Hopefully during the rental term you are working to improve your credit, save up money, and work with a local Baltimore mortgage broker or bank to get pre-qualified BEFORE the rent to own agreement expires.

At the end of the rental period, you as the tenant / buyer have the choice to either buy the house at the price in the agreement or you can walk away. Under special circumstances you may be able to update the rent to own agreement to give you a bit more time to get qualified for a bank loan to buy the house.

Our ultimate goal with our local Baltimore Rent To Own Program is to help you reach your goal of home ownership. We can often be flexible if you need a few extra months to coordinate financially with the bank to close on the house.

Do your research; keep browsing this website and check out our Frequently Asked Questions page, give us a call anytime at (443) 863-9808 or shoot us an email on our Contact page to chat with us about our local rent to own program.

If you haven’t found the Baltimore rent to own house that’s perfect for you, join our Early Property Alert List below to get email alerts quickly when we have new rent to own houses in the Baltimore MD area available.

See Available Rent To Own Houses In Baltimore MD Here >>

Get More Real Estate Market Info... Subscribe Below!

Learn more about us and find other resources on buying investment properties with us. Like us, follow us, connect!