Lease-to-Own: A Financing Option Millennials Love

Lease-to-Own: A Financing Option Millennials Love

The Demand Institute, a research firm, released a study about millennials and home buying. It found:

  • 75% believe home ownership is an important long-term goal
  • 73% believe home ownership is an excellent investment
  • 60% plan to buy a home in the future
  • 44% think it would be difficult to qualify for a home mortgage.

One of the most interesting findings is that 69% of millennials would consider a lease-to-own financing option. That means a portion of the rental payments would go towards the down payment of the home.

In a lease-to-own scenario, lenders determine the acceptable funds for the down payment by calculating the difference between the market rent (determined by the appraiser on the appraisal) and the actual rent paid over the last 12 months. 

The documentation people need, based on the Fannie Mae website:

  • Copy of rental/purchase agreement contract evidencing a minimum term of 12 months, clearly stating rental amounts and specifying terms of lease
  • Copies of borrower's cancelled checks/money order receipts for the last 12 month to prove rental payments
  • Market rent as determined by the subject property appraisal 

Please note some loan programs may not accept lease-to-own options. You need to discuss the options with a licensed mortgage loan officer

Still, the lease-to-own strategy might become more popular with millennials. It is important to let them know what's available and the criteria they need to fulfill.

I love talking with young people about financing options when they purchase a home. If you work with millennials who have mortgage-related questions, they can always call me at 757-490-4726 or email