3 Best Rent-to-Own Companies of 2025

07.02.2025 03:30

Lendedu.com

For many people, owning a home might feel like a dream these days (a far, far away dream). However, with the rise of rent-to-own companies, homeownership can now be a reality for many, including those with lower credit scores. Below, we’ll share what a rent-to-own agreement is and how it works.

We’ll also share our top picks for the best rent-to-own companies and the requirements to secure this type of homeownership contract. You’ll also find out about the pros and cons of these agreements, as well as when a rent-to-own deal is a good idea and when you should avoid it.

Reviews of the best rent-to-own home companies of 2025

Best lease-to-own for families: Home Partners of America
Best lease-to-own for credit improvement: Landis
Best rent-to-own for new buyers: Divvy Homes

Home Partners of America

Best Lease-to-Own for Families

4.6 _/5

View Website

Why it’s one of the best

Home Partners of America (HPA) stands out as the best lease-to-own option for families due to its broad property listings and flexible home choice options. Unlike some competitors, it allows families to pick a home from the market rather than limiting them to a specific inventory.

HPA has no short-term lease option—tenants can lease for up to five years, making it an excellent option for families with long-term housing needs. The program’s structure allows families to buy the home anytime during the lease, offering the freedom to transition from renting to owning when they’re ready. However, applicants must undergo a full application process and are responsible for closing and inspection fees.

With a minimum credit score of 600 and a minimum income requirement of $3,500 per month, it’s accessible for many families looking to make a home purchase more achievable.

Min. credit score	600
Min. income	$3,500/month
Term length	5 years
Fees	Closing and inspection

Where is it available?

As of January 2025, Home Partners of America is available in select metro areas of the following states:

Arizona
California
Colorado
Florida
Georgia
Illinois
Indiana
Kansas
Maryland
Minnesota
Missouri
Nevada
North Carolina
Oklahoma
Oregon
Pennsylvania
South Carolina
Tennessee
Texas
Utah
Virginia
Washington
Wisconsin

Landis

Best Lease-to-Own for Credit Improvement

4.5 _/5

View Website

Why it’s one of the best

Divvy Homes is a top choice for new buyers seeking a rent-to-own option, offering a straightforward path to homeownership with flexible terms. New buyers benefit from a quick prequalification process through a soft credit check, making it easy to start the application process without a hard inquiry.

Divvy is available in 19 states and allows tenants to co-apply with co-tenants, which can help ease the financial burden of qualifying. The program applies a portion of rent toward equity, helping tenants build ownership over time. With a minimum credit score of 550 and a minimum monthly income requirement of $2,500, Divvy is accessible to many first-time buyers.

Tenants can purchase the home at any time during the three-year lease period, and the repayment terms are clearly explained upfront. However, there are restrictions on property selection, with only Divvy-owned properties being eligible, and certain pet and price limits may apply.

Min. credit score	550
Min. income	$3,000/month
Term length	2 years
Fees	Appraisal fees

Where is it available?

As of January 2025, Landis is available in:

Alabama
Florida
Georgia
Indiana
Kentucky
North Carolina
Ohio
Tennessee

Divvy Homes

Best Rent-to-Own for New Buyers

4.4 _/5

View Website

Why it’s one of the best

Min. credit score	550
Min. income	$2,500/month
Term length	3 years
Fees	Closing fees

Where is it available?

As of January 2025, Divvy Homes is available in these areas:
Atlanta, Georgia
Cincinnati, Ohio
Cleveland and Northeast Ohio
Dallas/Fort Worth, Texas
Denver/Colorado Springs and Northern Colorado
Fort Lauderdale, Florida
Fort Myers, Florida
Houston, Texas
Jacksonville, Florida
Macon, Georgia
Memphis, Tennessee
Miami, Florida
Minneapolis, Minnesota
Orlando, Florida
Phoenix, Arizona
Pueblo, Colorado
San Antonio, Texas
St. Louis, Missouri
Tampa, Florida

What is rent-to-own, and how does it work?

According to the most recent American Community Survey from the Census Bureau, 42.5 million households are renting in the United States. Of those, more than 21 million spend over 30% of their income on rent, which the Census Bureau describes as cost-burdened.

Many renters want to become homeowners someday; however, several factors prevent it. Data from the 2025 Millennial Home Buyer Report from Clever Real Estate showed that 44% of millennials are worried that homes are unaffordable, and 26% worry their down payment would be too small to qualify for a home.

Rent-to-own home agreements provide a solution to this problem. Here’s how they work:

Parts of a rent-to-own agreement

Rental terms: You’ll sign a rental agreement with your landlord, much like a typical lease. In this lease, you’ll agree on rent, maintenance, and more. With a rent-to-own agreement, what’s different is your landlord can elect to save part of your rent toward equity in your home.
Option fee: One type of rent-to-own agreement is called a lease-option agreement. With this agreement, you pay an upfront fee for the option to purchase the home at the end of your lease. The other type of rent-to-own agreement is a lease-purchase agreement, where you’re obligated to buy the home at the end of your lease.
Purchase price: Before you start renting the home, you will agree on a purchase price with your landlord (or rent-to-own company). You should pay for a home appraisal to ensure the purchase price is fair. This purchase price is typically fixed for the duration of your lease, meaning your landlord can’t change the home price even if the market fluctuates.
Lease period: Every rent-to-home agreement is different. Some people rent for a year and purchase their home, while others rent for several years to get enough time to save a down payment to purchase the home.
Purchasing the house: If you decide to purchase the house, you’ll need to secure financing from a mortgage lender. Then the process is similar to buying a home outright, except a portion of your rent payments during your lease can apply toward your down payment.

Every lease-to-own agreement is different, so it’s important to consult professionals—a realtor and real estate attorney, for example—to ensure you understand every aspect of your rent-to-own agreement, including what happens if you violate your lease.

What is rent-to-own vs. lease-to-own?

Rent-to-own and lease-to-own are interchangeable terms that both describe the process of renting a house and building equity in it over time with the intention of purchasing it at the end of the contract. You might also see the phrase “rent-to-buy” agreement to describe the same concept.

There is an important distinction between the two types of rent-to-own options: lease purchase vs. lease option.

If you sign a lease-purchase agreement, you are obligated to purchase the home at the end of your rent-to-own contract.
With a lease option agreement, you pay an option fee to have the option to purchase a home (or not) at the end of your contract.

Is it hard to get approved for rent-to-own?

Getting approved for a rent-to-own contract is easier than getting approved for a mortgage. Some rent-to-own companies, including Divvy Homes, accept customers with credit scores as low as 550 and a minimum monthly income of $2,500. Although each contract or company will have different requirements, having less-than-perfect credit is generally not a deterrent.

Buying a house with a conventional mortgage is different. Most lenders prefer a good credit score, a low debt-to-income ratio, a down payment, and a stable job history of at least two years. Requirements for non-conventional mortgages—including FHA loans, USDA loans, and VA loans—allow for lower credit scores and down payments.

It’s wise to research all your options and calculate the total cost of each to ensure you choose one that works best with your personal financial situation and your goals for homeownership in the future.

Is rent-to-own cheaper than buying?

If you add up the costs of a rent-to-own contract, including a premium on rent and the option fee, a rent-to-own contract can be more expensive than buying a house outright. However, the benefit of a lease-to-own contract is that your costs are spread over a longer period of time, which can put homeownership in reach for those who don’t qualify for a mortgage.

Here is an example of the potential cost differences between a rent-to-own contract on a $150,000 home and buying the house outright.

$150,000 home	3-year rent-to-own contract	Buying outright
Upfront option fee	$4,500 (3% of $150,000)	$0
Monthly rent + premium for down payment credit	$1,500 (including a $400 credit toward down payment)	$0
Total down payment	$14,400 (Total down payment credits after 36 months)	$15,000 (10% of $150,000)
Total effective cost	$194,000 (option fee + rent paid during lease + mortgage balance after down payment credit)	$150,000 (including $15,000 down payment)

The table above shows a simplified comparison of a rent-to-own contract versus buying a home outright. However, other costs to consider include:

Appraisal fees
Closing costs
Private mortgage insurance (PMI) for a down payment of less than 20%
Property taxes
Maintenance

These other costs make the home-buying process more expensive. Also, it’s important to consider other intangibles—for example, how rent-to-own options accept applicants with less-than-perfect credit and give them the time necessary to take steps to improve their finances.

Purchasing a home is a major financial decision, one that requires time, planning, and access to lending options that might not be available to everyone. Therefore, although a rent-to-own program could be more expensive over time, it provides the opportunity to be a homeowner to those who might not otherwise have it.

Pros and cons of renting to own

Here are the pros and cons of signing a rent-to-own agreement.

Pros

Time to save for a down payment

According to the International Association of Certified Home Inspectors, rent-to-own contracts are typically less than three years, giving renters the opportunity to save for a down payment.
Locked-in purchased price

Before you start renting a home, you agree on the price you’ll pay for the home in the future.
Gain equity as a renter

Rent-to-own agreements typically allow you to apply a portion of your rent toward building equity in your home.
Opportunity to try the home

If you have a lease-option agreement, you are not obligated to buy the house (though you will likely lose your option fee if you walk away.) Still, this gives you the opportunity to see what it’s like to live in the home you want to buy.

Cons

Higher rent than typical

Because a portion of rent typically goes toward building home equity, rental prices for lease-to-own houses tend to be higher than the typical market.
Hefty option fee

With a lease-option agreement, you’ll pay a high option fee that can be between 2.5% and 7% of the purchase price. This means you’ll pay thousands upfront before moving into your rental.
Limited inventory

Rent-to-own deals have been more challenging to find in the past; however, rent-to-own companies such as Divvy are making it easier.
Risk of forfeiting your fees and equity

Depending on the terms of your contract, you could lose your option fee and any earned equity if you’re late on your rent payments or violate your lease in other ways.

Is rent-to-own a smart idea?

A rent-to-own agreement is a good idea in certain situations. Here are scenarios when it’s a good idea and when it’s not:

When rent-to-own is a good idea

You want a home in a hot market: In a hot market, home prices often increase faster. If you’re not ready to buy yet, a rent-to-own agreement allows you to lock in the price of your property while you take the time to improve your finances.
You need to improve your credit: If you want to be a homeowner but have poor credit, securing a rent-to-own agreement is one way to save for a down payment while giving you time to improve your credit.
You want to try out a neighborhood: If you want to purchase a home in a specific neighborhood but don’t have the funds yet, a rent-to-own agreement is one way to see whether it’s right for you before purchasing.

When rent-to-own isn’t a good idea

You have financial instability: If you’re experiencing financial instability and are unsure whether you can afford rent or mortgage payments in the future, it’s not an ideal time to sign a rent-to-own agreement. If you can’t make your rent on time, you could lose your down payment contributions and the opportunity to buy your house.
You’re unsure about homeownership: Homeownership is a massive commitment that involves costs beyond your mortgage payments. If you’re not sure you want to manage a house, maintain it, and live in a specific location for an extended time, this may not be the best option.
No access to financing: Even though a portion of your rent payments can go toward a down payment in rent-to-own agreements, you’ll still need to secure mortgage financing from a lender to officially buy your house at the end of your lease. If you don’t have access to financing or you don’t think you’ll qualify, this won’t be a good option.

FAQ

What does your credit score have to be for rent-to-own?

There’s no universal credit score requirement for rent-to-own agreements, but landlords typically prefer tenants with fair to good credit. Our highest-rated companies require minimum credit scores of 550 or 600. However, one of the appeals of rent-to-own is that it can provide a path to homeownership for those with lower credit scores who may not qualify for a traditional mortgage. Some agreements also allow tenants to work on improving their credit during the rental period.

Keep in mind that landlords or companies offering rent-to-own deals may still perform a credit check and review your financial history to assess your ability to make payments. Stronger credit scores can lead to more favorable terms, such as a smaller upfront option fee or lower monthly payments.

How long are rent-to-own contracts?

Rent-to-own contracts generally last one to five years, depending on the agreement. Shorter contracts (one to two years) are common for tenants close to qualifying for a mortgage, while longer contracts (three to five years) give more time to rebuild credit or save for a down payment.

Some contracts specify a fixed purchase date, while others let tenants buy the property anytime during the term. The contract length should align with your financial goals and ability to secure a mortgage by the end of the term.

Do you need a down payment for rent-to-own?

A traditional down payment isn’t required for rent-to-own agreements, but most contracts require an option fee or option deposit to secure the right to purchase the property. This fee is typically 1% to 5% of the home’s purchase price, and it’s usually non-refundable if you choose not to buy the property.

Part of your monthly rent payments may go toward the home’s purchase price, helping you build equity over time. However, the option fee is not the same as a down payment, and tenants will still need to secure a mortgage to complete the purchase when the contract ends.

Why is rent-to-own a bad idea?

Rent-to-own agreements carry risks, including high upfront costs, non-refundable fees, and the possibility of losing your investment if you can’t qualify for a mortgage. Even after the rental period, you may face challenges securing financing or discover you’ve overpaid if the market value drops.

Many contracts also shift maintenance responsibilities to tenants, adding unexpected expenses. While rent-to-own can work for some, it’s essential to review the terms and weigh alternative home-buying strategies that may be less risky.

Can a landlord back out of a rent-to-own contract?

Yes, a landlord can back out of a rent-to-own contract under certain conditions—typically if the tenant breaches the agreement, such as missing payments or failing to maintain the property.

Some contracts also include clauses allowing landlords to terminate the agreement under specific circumstances. However, if the tenant fulfills all terms and the landlord backs out without cause, the tenant may have legal grounds to sue for breach of contract. To protect both parties, it’s crucial to outline all rights and obligations clearly in the agreement.

How we chose the best rent-to-own companies of 2025

Since 2020, LendEDU has evaluated mortgage companies to help readers find the best options. Our latest analysis reviewed 84 data points from 3 companies, with 28 data points collected from each. This information is gathered from company websites, online applications, public disclosures, customer reviews, and direct communication with company representatives.

We organize these data points into broader categories, which our editorial team weights and scores based on their relative importance to readers. These star ratings help us determine which companies are best for different situations. We don’t believe two companies can be the best for the same purpose, so we only show each best-for designation once.

We award higher star ratings to companies that create an excellent rent-to-own experience and provide transparent solutions. This includes offering online eligibility checks, cost transparency, and unique benefits that support homeowners throughout the term.

List of rent-to-own companies we evaluated

Home Partners of America
Landis
Divvy Homes

Recap of the best rent-to-own companies

The post 3 Best Rent-to-Own Companies of 2025 appeared first on LendEDU.