How to use this calculator
- Enter today's value and the purchase price written in the agreement.
- Enter the rental period, option fee and whether the fee is credited toward the price.
- Enter your monthly rent, the part credited toward purchase, and typical market rent.
- Enter an appreciation estimate and the mortgage rate you expect to qualify for.
- Review the amount owed at purchase, the estimated mortgage payment and projected equity.
Worked example
You rent a home worth $280,000.00 for 3 years at $2,100.00 a month, with $250.00 a month credited and a $7,000.00 option fee credited, toward a $295,000.00 price. Credits total $9,000.00 plus the fee, so you still owe $279,000.00, about $1,856.19 a month at 7%. At 3% appreciation the home would be worth $305,963.56, giving $26,963.56 of equity. You paid $7,200.00 above market rent along the way.
These are the default inputs above, so you can follow along.
The formula
Credits = monthly rent credit × months (+ option fee if credited). Amount owed = purchase price − credits. Projected value = today's value × (1 + appreciation)years. Projected equity = projected value − amount owed. Rent premium = (your rent − market rent) × months. The mortgage estimate uses M = P × r / (1 − (1 + r)−n) on the amount owed (before any new down payment).
Frequently asked questions
Do I get my option fee back if I don't buy?
Usually not. The option fee typically buys the right to purchase and is non-refundable unless the agreement says otherwise.
Are rent credits refundable?
Generally no. Credits normally apply only if you complete the purchase. Read the agreement carefully.
Is the purchase price fixed?
In many rent-to-own agreements the price is set at signing. Others use an appraisal at purchase time. A fixed price helps you if values rise.
What if I can't get a mortgage when the lease ends?
You may lose your option fee and credits. Some buyers ask for an extension clause, or work on credit and savings throughout the lease.
Is rent-to-own the same as a lease option?
They are closely related. A lease option gives you the right, but not the obligation, to buy. A "lease purchase" may obligate you to buy. Use the lease option calculator to test the buy-or-walk decision.