Frequently Asked Questions About Lease-To-Own

General Questions About Lease-To-Own
How does Lease-To-Own work?
Is Lease-To-Own right for me?
What are the benefits of Lease-To-Own?
Will I save money with Lease-To-Own vs renting?
How much will my monthly lease payment cost?
What costs are covered in my lease payment?
How long do I lease the home before I become the homeowner?
How do I become the homeowner at the end of my lease?

Questions About Applying For Lease-To-Own
How do I apply for Lease-To-Own?
How much does it cost to apply?
What do I get for my application fee?
Do I have to pay a downpayment?
What if I am currently renting, and my lease doesn't expire soon?
If I currently own a home or other property, can I still qualify?
How do I know if I will qualify for Lease-To-Own?
If I have a low credit score can I still qualify?
How much income do I have to earn to qualify?
Can I use section 8 vouchers or other government assistance to make my lease payment?
Will I qualify if I've had a bankruptcy or foreclosure?
Will I qualify if I have unpaid collections or civil judgments?
Will I qualify if I have a lot of debt?
Will I qualify if I have an unpaid tax lien?
Will I qualify if I've had an automobile repossession?
Do I have to take a home buyers education course or credit counseling to qualify?

Questions About Lease-To-Own Homes
What homes are eligible?
Where are the homes located?
How will I find the right home for me?
Can I get a tax deduction during my lease period?
Can I use my own real estate agent?
What if I find a new home I want, but the builder is not participating in the LTO program?
What if the house needs repairs while I am leasing?
Do I have to pay for home insurance and property taxes?

Q: How does Lease-To-Own work?
A: There are 4 main steps to Lease-To-Own: 1. Apply, 2. Choose a home, 3. Sign your 18-month lease and move in, and sign the option to purchase, 4. Assume the loan and become the homeowner. Visit our page called "How Does LTO Work?" to learn more. Back To Top

Q: Is Lease-To-Own right for me?
A: If you are currently a renter, chances are, lease-to-own is an excellent choice for you. Visit our page called "Is LTO Right For Me" to learn more. Back To Top

Q: What are the benefits of Lease-To-Own?
A: Lease-to-own offers many benefits over renting. The most obvious benefit is the chance to escape the rent race and achieve the dream of homeownership. To see other benefits, visit our page called "Is LTO Right For Me" to learn more. Back To Top

Q: Will I save money with Lease-To-Own vs renting?
A: Within just a year or two after beginning the lease-to-own program, your typical savings may be significant. Check out this comparison chart to see for yourself. Back To Top

Q: How much will my monthly lease payments cost?
A: The amount you will pay during the 18-month lease period depends on the fair market rent of your area. After you assume our loan the amount of your mortgage payment will vary depending on the price of the home you choose, the interest rate, the property taxes assessed to the home, the cost of hazard insurance, and any additional fees such as homeowner association dues. Only after you apply and choose a home, can your counselor give you an accurate estimate of your lease payment. Below are some estimated ranges of the lease payments for this program:

Because this is a homeownership program, you should be looking at the savings you will get over a period of years, not months. Check out this comparison to see how significant your savings can be within just a few years.

*All figures in the chart above are estimates. This does not constitute an official "Good Faith Estimate". Mortgage estimate includes estimated principal, interest, taxes and insurance for first and second mortgage. Second mortgage has a balloon payment at end of 15th year. Read this FAQ to get more information about property taxes and insurance costs. Back To Top

Q: What costs are covered in my lease payment before assumption?
A: Your monthly payment during the lease period will include:

Professional Property Management
Lease Servicing
Monthly ScoreManager credit management
Monthly Installment into a Borrowers Savings Account, paid as a security deposit. If you qualify to assume the loan, these funds are used to pay for assumption costs, including: prepaid taxes, insurance, and assumption fees.

Because you do not own the home during the lease period, you do not pay for real estate property taxes, homeowner's insurance, or homeowners association dues. However; you will be responsible for obtaining a renters insurance policy to cover your belongings and your liability. Back To Top

Q: How long do I lease the home before I become the homeowner?
A: The lease period is 18 months or less depending on your credit status. You may assume our loan early if you meet the qualifying guidelines. Or, at the end of the 18 months, you have the option to assume the loan and become the homeowner, if you are qualified. Assuming the loan is an incredible opportunity for you. That's because when you assume the loan, you stand to benefit from the increase in value that has accumulated with the home's appreciation, if any. Back To Top

Q: How do I become the homeowner at the end of my lease?
A: To become the homeowner, you must qualify to "assume" the mortgage. Qualifying is a 2 step process that requires that you; 1) abide by all the terms of the lease, and 2) financially qualify to assume the mortgage. "Assuming" the mortgage is a process whereby you take over the mortgage payments (and all other homeownership costs) from the home's current owner. Think of it as getting the home and the mortgage "signed-over" to you. In order to qualify to assume the mortgage, you must meet certain criteria, including making all your lease payments on time, and working diligently to improve your credit with the help of our ScoreManager program. Other conditions apply. You will be responsible for certain assumption fees, some of which may be covered by your monthly security deposit. If you are unable to qualify to assume the loan at the end of the lease period, the Program Issuer, in it's sole discretion, may extend the lease to you or another qualified lessee/tenant. Back To Top

Q: How do I apply for Lease-To-Own?
A: There are 3 ways to apply:

1. Apply Online
2. Apply over the phone at 214-722-5800 or 800-362-6101
3. Apply by US mail by downloading the application form PDF

You can pay for the application fee using a credit card, or you may mail us a check or money order. Back To Top

Q: How much does it cost to apply?
A: The cost to apply is $19.95. Back To Top

Q: What do I get for my application fee?
A: When you submit your paid application, a professional counselor will personally review your application and contact you to inform you of your qualification status within 1-4 weeks. It's important to understand that although thousands of families will apply for this special program, less than 1,000 will qualify. For this reason, your application fee is non-refundable. Applicants will be qualified on a first-come, first-served basis, so apply now. Back To Top

Q: Do I have to pay a downpayment?
A: No. You do not have to pay a downpayment. If you apply and are approved for the program, you will be asked to pay a program fee (an amount not to exceed one monthly lease payment) and your first month's lease payment prior to moving in to your new home. Back To Top

Q: What if I am currently renting, and my lease doesn't expire soon?
A: If your current lease agreement expires in the next 12 months or less, you should apply now for the lease-to-own program. That's because funds for this program are limited and all applicants will be approved on a first-come, first-served basis. By applying now, you can ensure funds will be available for you when your current lease expires. And we can work with you and the builder to schedule the construction of your home so that it will be ready when you are. In addition to securing funds, applying now will give you the benefit of a head-start in preparing for homeownership by taking advantage of your ScoreManager enrollment. Back To Top

Q: If I currently own a home or other property, can I still qualify?
A: You can still qualify if you own a home and plan to sell it prior to signing your lease agreement. If you plan to sell your home, you should apply now for the lease-to-own program. You may own other undeveloped land (ie: land without a home on it); however, you can not own another home when you enter the lease agreement. Back To Top

Q: How do I know if I will qualify for Lease-To-Own?
A: It is generally easier to qualify for lease-to-own than applying for a typical home purchase mortgage. That's because there is no downpayment and it's OK to have a few bumps and bruises on your credit. The only way you can find out for certain if you qualify is to apply. But before applying, you should ask yourself the questions listed here. Back To Top

Q: If I have a low credit score can I still qualify?
A: There is no minimum credit score required to qualify for this program. However, there are other minimum credit requirements. To determine if you should apply for lease-to-own, you should ask yourself the questions listed here. Back To Top

Q: How much income do I have to earn to qualify?
A: While there is no minimum or maximum income required for this program, there are limitations to the amount of debt you can carry. In most cases, this program will be appropriate for those earning $50,000 or more household income. Income can come from all persons who are signing the lease agreement, as well as boarder income, if it comes from a family member living in the home. Although no minimum time on the job is required, income must be stable and durable. Income may be full-time, part-time or self-employed. All income must be documentable. To determine if you should apply for lease-to-own, you should ask yourself the questions listed here. Back To Top

Q: Can I use section 8 vouchers or other assistance to make my lease payment?
A: No.  Section 8 vouchers cannot be counted as part of your income, nor can they be used to make all or part of the monthly lease payment. Social Security, pension, disability and/or family support payments can be counted as part of your income under certain circumstances, so long as the payments are reasonably expected to continue for at least 3 years. To determine if you should apply for lease-to-own, you should ask yourself the questions listed here. Back To Top

Q: Will I qualify if I've had a bankruptcy or foreclosure?
A: If the foreclosure or bankruptcy was discharged over 3 years ago, and you have re-established good credit habits since then, you may still qualify. To determine if you should apply for lease-to-own, you should ask yourself the questions listed here. Back To Top

Q: Will I qualify if I have unpaid collections or civil judgments?
A: If the collections and/or civil judgments are reported in error, you can dispute them with the help of your ScoreManager enrollment. If you can pay-off the collections and civil judgments prior to signing your lease agreement, (or resolve them with a legitimate dispute process), you may still qualify. Furthermore, you may also choose to establish a written debt repayment plan to pay-off the debt in installments over time. When you setup a debt repayment plan in writing, you may qualify to lease-to-own even while you are still repaying your past debts. Certain collection accounts can be disregarded, and therefore not affect your qualification status. Collection accounts that are more than 2 years old AND in an amount less than $500 may be disregarded. Medical collections may be overlooked on a case-by-case basis. To determine if you should apply for lease-to-own, you should ask yourself the questions listed here. Back To Top

Q: Will I qualify if I have a lot of debt?
A: This depends on your total monthly income and total monthly debt payments - in other words, your Debt-To-Income Ratio (DTI). To qualify for this program, your total monthly debt payments and anticipated lease-to-own payment must not exceed 45% of your total monthly income (45% DTI). To determine this, you should add the monthly payments on your existing debt such as car payments, minimum payments on credit cards, loan payments and other debts (if any). Also add in the anticipated lease payment for your lease-to-own home (see here for estimates.) Do not include monthly expenses such food, utilities and insurance. Then add up your total gross monthly income before taxes. Your total monthly debt payments, including your estimated lease payment, should not exceed 45% of your monthly income. If this formula seems too complicated, don't worry. When you apply for the program, your DTI will be calculated automatically, and your counselor can help explain it to you. To determine if you should apply for lease-to-own, you should ask yourself the questions listed here. Back To Top

Q: Will I qualify if I have an unpaid tax lien?
A: No. All tax liens must be paid in full prior to entering the lease-to-own program. Back To Top

Q: Will I qualify if I've had an automobile repossession?
A: A repossession or voluntary surrender will not by itself prevent you from qualifying for the lease-to-own program. Other factors will be used to determine your qualification. To determine if you should apply for lease-to-own, you should ask yourself the questions listed here. Back To Top

Q: Do I have to take a home buyers education course or credit counseling to qualify?
A: Yes. When you submit your paid application, you will begin a credit counseling and education program called ScoreManager. If you are approved for the program, and enter a lease, you will continue in the ScoreManager for the duration of the 18-month lease period at no additional charge. If there is a significant time gap between the time you apply and the time your home is ready, you may need to enroll in the ScoreManager (at your own expense) to stay on track to homeownership. Back To Top

Q: What homes are eligible?
A: This program is for newly constructed homes only. Visit our page called "What Homes Are Eligible" to learn more. Back To Top

Q: Where are the homes located?
A: Participating builders from all over Texas are supplying the highest-quality homes to lease-to-own. Other states will be eligible soon. Visit our page called "What Homes Are Eligible" to learn more. Back To Top

Q: How will I find the right home for me?
A: After you submit your application and are pre-approved for the program, one our our professional home counselors will work with you to find the perfect home and home builder. Visit our page called "What Homes Are Eligible" to learn more. Back To Top

Q: Can I get a tax deduction during my lease period?
A: No. During the 18-month lease period you can not deduct the property taxes or interest because you are not yet the homeowner. When you assume the loan at the end of the lease, you will then be the homeowner, and will be eligible to deduct all future property taxes and mortgage interest, as allowed under federal and state tax laws. Back To Top

Q: Can I use my own real estate agent?
A: No. One of the ways that this program keeps costs down is that there are no real estate broker fees allowed to 3rd party real estate agents. But you need not worry about finding the right home -- our counselors will help you through this process. And you won't have to be involved in negotiating the sales contract, that's because we are buying the property on your behalf. Due to the large volume of units we will be buying, we have considerable bargaining power to negotiate affordable deals. But funds to purchase homes will go fast. You should apply now for the best chance at becoming qualified. Back To Top

Q: What if I find a new home I want, but the builder is not participating in the LTO program?
A: If you submit a paid application to us, and are approved for the program, we will make every effort to negotiate with the builder of your choice. Most builders see the tremendous value of participating in the lease-to-own program. So long as the homes the builder sells meet the program requirements, we may be able to work with the builder of your choice. If we are unable to negotiate with the builder, we will refer you to a participating builder offering a similar home. Back To Top

Q: What if the house needs repairs while I am leasing?
A: A home warranty covers repairs to most home systems and built-in appliances during the 18-month lease period. If a repair is required for warranty items, you will pay a nominal fee for a service technician to come to the home to make the repair. In all other respects, it will be your responsibility to take pride in your home and maintain it properly during the lease period - just as if it were your own home. Back To Top

Q: Do I have to pay for home insurance and property taxes?
A: During the 18-month lease period, you do not have to pay for home insurance or property taxes. The home insurance provided (called all-risk hazard insurance) does NOT cover the contents of your home, such as furniture. You must obtain a separate Renters Insurance policy to cover your belongings and your liability. After you assume the loan and become the homeowner, you will be responsible to obtain a comprehensive home insurance policy, and you will be required to pay property taxes and all other fees associated with homeownership. Back To Top

Or Call 214-722-5800 • 800-362-6101