| Why trust us: To create this comprehensive guide, we researched the available housing options in Orlando, consulted with local housing experts, and had the guide reviewed by a real estate professional with rent-to-own experience. Learn more. |
Rent-to-own homes offer a unique pathway to homeownership for individuals with less-than-perfect credit or limited funds. The contracts allow tenants to rent a property with an option to buy it in the future, providing a potential solution for prospective buyers who face financial barriers.
However, the success rates of these programs vary, with one study finding that half of all customers don't purchase the home.[1]
In Dallas, rent-to-own homes present additional challenges. Experts say that rising mortgage interest rates, falling or stagnant home prices, and limited housing inventory has made it difficult for locals to find and purchase rent-to-own properties.
Our guide explores rent-to-own homes in Dallas, compares available options, and suggests alternatives for affordable homeownership, including down payment assistance programs and grants.
What to know about rent-to-own homes in Dallas
Difficult buy-back process
It's near-impossible for Dallas locals to find and purchase a rent-to-own home, largely due to high mortgage rates and limited inventory, says Elena Garrett, a realtor in Dallas–Fort Worth who has worked directly with Divvy Homes.
"Some areas are seeing a price decrease of over $50,000 to $100,000 per home," she says. "This causes problems with the rent-to-own buy-back process and makes it hard for people to complete the purchase."
"Many of my clients are exiting the Divvy program [before making the home purchase] because they cannot figure out how to make its buy-back work," Garrett adds.
Limited options
Business activity for Divvy Homes and Home Partners of America — the two largest rent-to-own companies in Dallas — has slowed significantly along with the general housing market slowdown, according to Garrett.
Other companies just don't have many housing options available. For example, Pathway Homes and Trio Homes combined have only a handful of rent-to-own options listed on their websites at the time of article publication.
» LEARN: How to find rent-to-own homes
Widespread fraud
"Anything that's not Divvy or Home Partners is 99% a scam [in the Dallas market]," Garrett warns." Learn how to spot a rent-to-own scam.
Compare rent-to-own options in Dallas
Our top rent-to-own picks are Divvy Homes and Pathway Homes — but with important caveats.
Divvy Homes lists hundreds of Divvy-ready properties (i.e., homes it already owns) on its website, but you won't be able to buy a new home through the company.[2]
Garrett explains that Divvy-ready homes were "previously rented by Divvy customers who decided not to proceed with the purchase, and Divvy puts them back on the market as an option for rent-to-own."
Pathway Homes offers two significant advantages over its competitors. First, these programs let you lock in your purchase price for five years, potentially benefiting from the home's rise in value. Second, you can build up a down payment as you rent, which is attractive for those who may struggle to save a lump sum upfront.
Other rent-to-own companies serving Dallas
You likely won't be able to buy a new home in Dallas through rent-to-own companies because not many currently operate there on a big scale. However, if you come across homes owned by a major home rental company, here are some considerations:
- Home Partners may be an option if you have better credit but lack savings. It requires a security deposit, and you won’t pay a termination fee if you change your mind about buying the property or a down payment.
- Trio Homes works best if you struggle to qualify for a traditional mortgage but can afford monthly payments on a property.
Independent landlords
Garrett cautions against choosing a rent-to-own home that's not offered by an established company. Landlords in Dallas who offer lease-to-own can set their own eligibility criteria — payment structure, lease length, purchase price, and other conditions.
Even if the local landlord is legitimate and not trying to scam you, Garrett explains that they may underestimate the complexities of rent-to-own, create contracts without consulting an attorney, and possibly overcharge you.
Get help from a local realtor
If you're considering renting to own a home, either through a company or a local listing, it's smart to have a local realtor on your side.
A realtor can help guide you through the ins and outs of rent-to-own homes, including spotting red flags or rent-to-own scams, fraudulent listings, and bad contracts. They can also refer you to a mortgage lender to see if you qualify for financing to buy now (versus going the rent-to-own route).
» LEARN: How to find a realtor that's right for you
🔎 Pro tip
Your credit score affects your ability to qualify for a mortgage. Check your credit score now, and you can take work to improve it and correct any mistakes in your credit report.
Not sure where your credit stands? Get your credit report at AnnualCreditReport.com. This free resource gives you access to your scores from all three major credit bureaus (Equifax, Experian, and TransUnion) once a year.
Rent-to-own home alternatives in Dallas
Down payment and closing cost assistance programs
The Upfront Cost Assistance Program (UPCAP) offers low- to moderate-income households with funds for closing costs and down payment, as well as home buyer education and mortgage counseling.
The Texas Homebuyer Program provides home loans, down payment assistance, and closing cost assistance. Unlike many other programs, it does not require applicants to be first-time home buyers or meet certain employment qualifications.
Bank of America offers several down payment and closing cost assistance programs for first-time home buyers:
- Community Affordable Loan Solution offers low down payment and closing costs and requires no mortgage insurance or minimum credit score. Eligibility is based on income and location, and you must complete an approved home buyer course BEFORE applying.
- Our America's Home Grant Program offers a lender credit of up to $7,500 for certain closing costs, while its Our Down Payment Grant Program provides a grant of up to 3% of the home's purchase price (max $10,000).
First-time home buyer loans
| Loan type | Min. down payment | Min. credit score | Max. debt-to-income level |
|---|---|---|---|
| FHA | 3.5% | 10% | 580 | 500–79 | 43% |
| USDA | None | Varies by lender | 41% |
| VA | None | 580 | 41% |
| Rental | 1–2 months rent | 680 | 33% |
| Conventional | 20% | 620 | 45% |
FHA loans
FHA loans are popular with first-time home buyers without a large down payment. You can get into a house with just 3% down if your credit score is at least 580. Just note that you must pay mortgage insurance and the property must meet certain requirements to qualify.
USDA loans
Some ZIP codes (such as 75159 and 75172) are eligible for a USDA Rural Development home loan. These loans offer low interest rates without a down payment, making it an attractive option for first-time home buyers looking for rural property.
VA loans
Eligible veterans, active-duty service members, and surviving spouses can apply for VA loans. The program offers a zero down payment option and has a low minimum credit score requirement that can vary by lender. However, you’ll pay a funding fee depending on your military service category and down payment amount.
State, city, and nationwide grants
The Dallas Homebuyer Assistance Program (DHAP) offers forgivable home loans of up to $60,000 for low- and moderate-income home buyers. To qualify, applicants must work in educational instruction, library occupations, healthcare, or protective services, and meet income requirements.
The City of Dallas also offers the Targeted Occupations Homebuyer Assistance Program. Note: All current funding has been expended, with new funding anticipated in October 2024. Applications will be accepted starting October 1st, 2024.
Local affordable housing options
Opportunity Home Dallas provides access low-income residents in Dallas have access to affordable housing options. Armed with programs like the Housing Choice Voucher Program (formerly called Section 8) and a management team that oversees low-income housing units, this program is dedicated to ensuring that eligible residents have access to safe and affordable housing.
Free resources in Dallas
Local housing counselors
The Dallas County Home Loan Counseling Center and Texas Department of Housing and Community Affairs both provide free counseling to help you on your journey to buy or rent a home. Local housing counselors can give you unbiased information on rent-to-own homes in Dallas, and point you to other useful resources, such as down payment assistance programs and financing options.
» FIND: HUD-approved housing counseling locations in Texas
Housing education programs
The Dallas Housing Authority offers services to low-income families, which include a housing education program that prepares them for homeownership. The goal is to empower families to achieve their dreams and create a better future for themselves and their communities.
Dallas Habitat for Humanity offers free online educational resources for people interested in buying a home. These resources include live webinars and on-demand courses, which cover several topics such as budgeting, credit, savings, debt management, and homeownership.
Why you should trust us
Our team at Clever spent several weeks learning the ins and outs of rent-to-own homes to create this comprehensive guide. We identified legitimate companies that operate in your area, consulted with local realtors, and researched government housing resources.
Our experts
- Elena Garrett, a realtor with Keller Williams Central 75 in Dallas. Garrett has direct experience assisting clients with rent-to-own programs in Dallas–Fort Worth.
- Steve Nicastro, a real estate professional who has advised numerous clients on whether rent-to-own housing is a good option for them. His expertise helped us provide a more in-depth understanding of the rent-to-own process.
