If, after delving into this guide, you find that rent-to-own isn’t the right fit for you, don’t worry. This could be due to various reasons, such as a low credit score, overwhelming debt, or maybe you have sufficient savings for a down payment or mortgage. Fortunately, there are alternative paths to homeownership, and we’re about to explore some of the most common ones.
1. Traditional Home Purchase
If you’re financially able to, purchasing a home with a conventional mortgage is often preferable to a rent-to-own situation. It’s especially advantageous if you’re ready to make a 20% down payment and meet the lender’s criteria regarding credit scores and employment history. This option allows you to bypass rent payments and start building equity immediately.
2. FHA Loan
Initiated in the 1930s under Franklin D. Roosevelt, the FHA loan program remains a popular choice for homebuyers. With this program, you can buy a home with as little as a 3.5% down payment if you have a credit score of at least 580 and fulfill other financial requirements. An FHA loan is essentially an insurance scheme where you pay premiums to cover potential lender losses. Opt for this if you’re prepared for homeownership but can only afford a minimal down payment.
3. Renting
For those who need time to improve their credit score or save for upfront costs, renting is a viable option. This approach gives you the flexibility to prepare financially until you’re ready to embark on a rent-to-own agreement or pursue another path to homeownership.