Rent-to-Own Homes in Houston and Best Alternatives (2023 Guide)

Amy Beardsley's PhotoSteve Nicastro's Photo
By Amy Beardsley & Steve Nicastro Updated April 21, 2023


Why trust us: To create this comprehensive guide, we researched the available housing options in Jacksonville, consulted with local housing experts, and had the guide reviewed by a real estate professional with rent-to-own experience. Learn more.
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Limited housing inventory in the Houston market available for home buyers has made it harder to purchase a home, according to Jessica Githens, a realtor based in The Woodlands. This shortage of housing has led some prospective home buyers to pursue alternative housing options, including rent-to-own homes.

Rent-to-own is often viewed as an option for prospective buyers who have a plan to improve their credit or income to qualify for a mortgage now, but finances while renting. A portion of your monthly payment also gets saved toward a down payment for the home’s eventual purchase.

Several national rent-to-own companies, including Divvy Homes and Home Partners of America, currently operate in Houston, and claim that they provide a clear path to homeownership. Read our guide to learn more about rent-to-own homes in Houston and explore potential housing alternatives.

What to know about rent-to-own homes in Houston

Popular option for housing stability

"In the last couple of years, as property values increased, landlords were essentially telling tenants 'sorry, lease is up,' and then selling the home," she says.

As a result, potential buyers or renters might consider a rent-to-own home to get locked into a rental agreement for the next one to three years or more, while retaining the option to buy the home.

A risky option, thanks to falling home prices

The decline in Houston's housing prices can pose risks for people locked into a rent-to-own agreement. Median sales prices on single-family homes in Houston have fallen by $30,000 since the peak of June 2022.

Here's why it could pose a challenge: Lenders typically provide a loan only up to the home's appraised value. So if your option price — the predetermined price to buy the home — exceeds the appraisal value, you could be on the hook for the additional amount or risk breaking the contract.

Githens warns that rent-to-own can be costly, and it's not a suitable option for everyone. She advises her clients to exhaust all other buying options and resources first. "Then if we know that those other options are 100% a no, we may explore [the rent-to-own] route."

⚠️ A contract for deed is NOT the same thing as rent-to-own

In a contract for deed (also known as seller financing, land contract, or installment sale contract), the buyer makes a down payment and monthly payments to the seller — but doesn't gain any equity in the property or own it until the final payment is made.

"Contract for deed buyers have all of the responsibilities of home ownership…but none of the protections," explains Lisa Nelson of the Federal Reserve Bank of Cleveland.

Be aware that contracts for deeds can carry strict conditions. For example, the Texas Attorney General warns consumers that they can lose their homes if they're just a few days late on one payment.

» MORE: Why is the Federal Reserve studying contracts for deed?

Compare rent-to-own options in Houston

A handful of national rent-to-own companies service Houston and the surrounding areas.

Trio Homes works best if you have a lower credit score or lack a substantial down payment. With a small option fee, you can get into a house for very little money down and rent it while building equity in the property.

Pathway Homes is an alternative if your finances are in good shape, but you want a longer lease period. You need a slightly higher credit score and a larger down payment to qualify. You can rent for up to five years, but the home's option price will also increase by 3% to 6% each year, making your home purchase less affordable.

Divvy Homes' rent–to–own program is among the easiest to qualify for because it has the lowest minimum credit score and income requirement. It has a termination fee of 2% of the home's price if you can't or don't buy the house at the end of your lease period.

Home Partners of America is an option to consider if you don’t have much in savings. You'd need slightly better credit than for Divvy Homes, but it's still one of the easiest rent-to-own programs to qualify for.

🔎 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 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 Houston

"Between down payment assistance and seller concessions, I've seen a lot of people close on their home while only bringing $500 or less to closing," says Janese Williams, a mortgage loan originator with Champions Mortgage, based in Sugar Land.

Down payment and closing cost assistance programs

Houston Homebuyer Assistance Program offers first-time home buyers a no-interest loan that's forgivable if they live in the home for five years. To qualify, you must have a household income at or below 80% of Houston's area median income.

Houston Neighborhood Lift Down Payment Assistance Program (offered in partnership with Wells Fargo and NeighborWorks America) provides $15,000 for home buyers to fund a down payment or closing costs on eligible properties — along with home buyer education.

Texas State Affordable Housing Corporation (TSAHC) offers two home buyer programs that provide mortgage loans and funding to use for your down payment. You can select either a grant or a forgivable second lien loan — you need to repay it only if you sell or refinance the property within three years.

  • Home Sweet Texas is open to all first-time buyers in Texas.
  • Homes for Texas Heroes is specifically for state-funded employees (such as teachers and emergency professionals) and veterans — though it has a slightly higher income threshold.

City grants

City of Houston's Homebuyer Choice Program provides up to $150,000 for low– and moderate-income residents to reduce the cost of purchasing a home. Eligible applicants must contribute at least $70,000, which can include funds from the mortgage you're applying for.

Local affordable housing options

Houston Housing Authority's Housing Choice Voucher Program(formerly Section 8) supports a range of housing options, including apartments, duplexes, and single-family homes.

Houston Habitat for Humanity helps families who need affordable, quality housing to those willing to contribute "sweat equity": volunteering to build other Habitat homes for families in need.

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%
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» LEARN: Improve your credit score to expand your borrowing options

FHA loans

FHA loans are a common choice for a first-time home buyer who lacks a large down payment. You can purchase a home with as little as 3.5% down and qualify with a low credit score. Borrowers are usually required to pay mortgage insurance, and the property must meet specific qualifications to be eligible for this type of loan.

USDA loans

Some towns outside of the Houston area are eligible for a USDA Rural Development home loan, including Columbus, Hempstead, and Sealy. USDA loans offer low interest rates, and require no down payment, making it an affordable option for first-time home buyers looking for a home in a rural area.

VA loans

Home loans through the Veterans Administration are available to veterans, active-duty service members, and surviving spouses. This program offers a 0% down payment option and has a low minimum credit score requirement, although requirements can vary by lender.

Free resources in Houston

Local housing counselors

A local housing counselor is a valuable resource when considering your housing options. They offer expert guidance and support, providing unbiased opinions and advice on the rent-to-own market in your area. They can also offer insights into other resources that can help you achieve your housing goals.

» FIND: HUD-approved housing counseling locations in Texas

Housing education programs

Avenue currently offers two class options for first-time home buyers in the Houston area. Its classes will help you learn how to review your finances ahead of a home purchase, learn about the different loan options available, the home buying process, and how to avoid common pitfalls.

Easterseals Greater Houston's free virtual class covers the basics of home buying, how to get down payment assistance, and budgeting for a mortgage. The course is taught by realtors and loan officers and requires a total of six hours of attendance for completion.

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

  • Jessica Githens, a realtor with CB&A Realtors, based in The Woodlands.
  • Janese Williams, a mortgage loan originator with Champions Mortgage, based in Sugar Land.
  • 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.

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