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In lease-option home deals, how much (%) of rent should go to the down payment?
I am looking at purchasing a home and want to know what we can or should ask for to go to the down payment. We WILL buy the house (so lease-purchase vs. option). Thanks!
Public Comments
- A lot of owners don't look at it as a percentage. They just have have a dollar figure in mind. Typically you will see $5000 as a down payment. The lowest I've seen are about $2000. They want someone who is serious about buying but perhaps just doesn't have the credit right now or for whatever reason won't qualify at the moment for a loan. But they normally want more than your typical security deposit...
- It's all negotiable. There is no correct answer. Just be sure to record your lease so that the owner cannot sell this place from under your nose. Also check with your state laws. In California, if your option fee is greater than one month's rent and if any percentage of rent goes towards the downpayment of the home, then the owner cannot simply evict you if you stop paying rent. One last thing, pull title on this right away to make sure that the person on the mortgage is the same person on title. So many scams are going on where an "investor" will save a foreclosed home, just to let it go into foreclosure again while collecting rent. A lease option is perfect for this scam because you get a security deposite, an option fee and increased rent due to the fact that the renter thinks that the increase in rent will go towards the purchase price. Good luck and I wish you well. Regards
