Mortgage product that allows low- and moderate-income homebuyers to lease a home from a nonprofit organization with an option to buy. Each month's rent payment consists of principal, interest, taxes, and insurance (PITI) payments on the first mortgage, plus an extra amount earmarked for deposit to a savings account in which money for a down payment will accumulate. Also known as Lease-purchase mortgage loan.
A financing option that allows a potential home buyer to lease a property with the option to buy. Often constructed so the monthly rent payment covers the owner's first mortgage payment, plus an additional amount as a savings deposit to accumulate cash for a downpayment. A seller may agree to a lease-purchase option if the housing market is saturated and the seller is having difficulty selling the property.