Use Rent Credit Towards Downpayment on Your New Home

There are programs around the country that would allow you to use a portion of your monthly rent as credit towards the downpayment on or the additional closing costs of your new home purchase.

There is obviously a pre-qualification process, like all such programs do have. But it's a rather innovative program that is worth a try, especially if you have items on your credit report that prevent you from getting a regular bank loan.

With such programs you earn credit that is applied towards the closing costs of your new home when your credit has been repaired and you are able to make the purchase. It is designed to cover any additional closing costs that you may incur at closing. This reduces and in certain cases even eliminates any additional cash required to purchase the home.

Once accepted and enrolled in such a program, you may receive up to a 50% Monthly Rent Credit, with a maximum total of 3% of the purchase price of the home towards your closing costs while you continue to pay on-time rent at any location of your choice.

For example, this is how a typical Rent Credit Program might work:

If your current rent is $700 per month, your Rent Credit in a 6 month program would be

350.00 credit per month x 6 months = $2,100 additional credit towards closing costs or downpayment.

Similarly, current rent of $900 per month on a 10 month program translates to

450.00 credit per month x 10 months = $4,500 additional credit towards closing costs or downpayment.

These are just hypothetical examples since the particular conditions of a Rent Credit program change from one company to another. You just have shop around and compare before making a decision.

But this is the bottom line:

You can stay in your current apartment or you can transfer the credit if you move. All you usually need to do is to provide a copy of your lease and proof of on-time payment and -- you earn the credit. With programs like this, it's as if you are no longer paying 50% of your rent because you are actually getting credit towards a home. How cool is that?

(This article is written for informational purposes only. For any home-purchasing or financial decision please consult a licensed professional.)

Ugur Akinci is the Editor of Your Home Buying Assistance Program (http://www.yourhomebuyingassistance.org) of New Hampshire and Eastern Massachusetts.