Renting vs Lease Option vs Contract for Deed

Lease option vs contract for deedWe understand that while most people are familiar with renting an apartment or home, the terms Lease Option or Contract for Deed can create confusion. Read more to understand the key differences and whats best for you.

Set Your Rent offers a variety of options to meet your needs and budget. Set Your Rent primarily offers Lease Options and Contract for Deed homes. The key differences are the costs and how involved you may be as a future home owner.  See table below.

With a larger down-payment, you can do a Contract for Deed and Set Your Rent acts as the bank. You would be primarily responsible for repairs and are essentially the home owner. This saves you over the term of the contract before making the final purchase. 

With less down you can look at getting into a lease option. This is a rental but with an exclusive option agreement giving you control over the home. This allows you to build equity while you are working on credit or work history to get a traditional home loan. You have exclusive right to purchase the home at a set price and time but are not obligated to do so. While this may cost more then traditional renting you are essentially getting into a starter home and automatically saving up for that bank loan.

Both options help people who can’t get a traditional loan when they have poor credit, odd work history, or or individuals who need to move in less than 90 days. 

Many people struggle to buy their primary home because they cannot qualify for a bank loan. We raise private capital to buy homes for people so they can finally become a homeowner. Typically this is a 1-5 year bridge loan (lease option or contract for deed) that allows them to act like a homeowner while they work to obtain a bank loan.

Renting vs Lease Option vs Contract for Deed​



Lease Option

Contract for Deed

Down Payment

1st month rent

1-10% of purchase price, minimum $5,000


Who owns property?


Landlord but you have exclusive buying / selling rights

You do.

Rent amount

Fair market rent

Typically higher than normal rent

Based on interest rate but usually 1% of purchase price

Biggest Pros

No long-term commitments

Not responsible for repairs

Control property without owning it

Build equity while you rent

You “own” the home

Act like a homeowner

Possible tax benefits

Biggest Cons

Landlord problems

Not building equity

No ownership

Higher down payment than rental

Responsible for most maintenance

100% responsible for home repairs

Sizable down payment