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The Rent-to-Own Program: A Path to Homeownership

main principles

How Does the Rent-to-Own Program Work?

The rent-to-own program is a two-step process that combines a traditional rental agreement with an option to purchase the property at a predetermined price within a specified timeframe.

- Rental Period

You start by renting the property you're interested in, just like a regular rental agreement. However, a portion of your monthly rent payment is set aside as credits towards the eventual purchase of the home.

- Purchase Option

After a predetermined period, typically ranging from one to three years, you have the option to exercise your right to purchase the property at the agreed-upon price. The credits you've accumulated during the rental period can be applied towards the down payment or closing costs.


Benefits of the Rent-to-Own Program

Homeownership Made Easier

The rent-to-own program provides a gradual path to homeownership, making it more accessible for those who may not have the resources for a traditional home purchase upfront.

Build Equity

A portion of your monthly rent payments is credited towards the eventual purchase of the property, allowing you to build equity from day one.

Lock in Purchase Price

The purchase price of the property is predetermined at the start of the agreement, protecting you from potential market fluctuations and rising home prices.

Try Before You Buy

The rental period gives you the opportunity to experience living in the property and the neighborhood before committing to the purchase, ensuring it's the right fit for you.

Saving & Secure

Rent-to-Own vs. Traditional Renting

Rent Credit for Down Payment
Money lost as Rent
YearRent-to-OwnTraditional Renting
1Monthly Rent: $1,800
Rent Credit: $600

Total Year 1 Cost: $30,600

Monthly Rent: $1,500

Total Year 1 Cost: $18,000

2Monthly Rent: $1,800
Rent Credit: $600

Total Year 2 Cost: $28,800

Monthly Rent: $1,500

Total Year 2 Cost: $18,000

3Monthly Rent: $1,800
Rent Credit: $600

Total Year 3 Cost: $28,800

Total 3 Year Cost: $88,200

Monthly Rent: $1,500

Total Year 3 Cost: $18,000

Total 3 Year Cost: $54,000

Key Points:

  • With rent-to-own, there is a $9,000 upfront option fee in year
    1, but $600 per month ($21,600 over 3 years) goes towards the eventual down payment
  • Rent is higher with rent-to-own at $1,800 vs $1,500 per month for traditional renting
  • Over 3 years, total costs are $88,200 for rent-to-own vs $54,000 for renting, a difference of $34,200
  • However, with rent-to-own, $21,600 of the $88,200 has been accumulated as a down payment to purchase the $450,000 home after 3 years.

So, while rent-to-own has higher upfront and monthly costs, a significant portion goes towards eventually purchasing the home, which is not the case with traditional renting, where all rent payments go to the landlord.

Lets discuss More about Rent to Own