When renting a house with an option to buy, also known as leasing with option to buy, you pay the landlord/seller a one-time, nonrefundable option fee. This money gives you an option to purchase at a specified date, usually within a couple of years. People with poor credit ratings often go this route, and try to repair their credit and qualify for a mortgage before the option expires.
Read the fine print
Laws on these options vary by state, and it’s crucial to have a real estate attorney – not a real estate agent – examine the contract. You want to ensure you have the option to purchase the property at the end of the designated period, not the obligation to buy it. It’s best to have a contract in which a percentage of the option money is applied to your purchase price if you decide to buy.