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Rent Credits For Down Payment Funds

Family who purcheased a home using rent credits sits on the floor of their kitchen while two children play nearbyThis is a quick reminder that renters can use “rent credits” towards their down payment.

The entire down payment can be in the form of a rent credit in fact.

The amount of the credit is the cumulative difference between the “Market Rent” and the “Actual Rent” paid.

For example, if the market rent for a property is $2,000 and the renter pays $3,000 instead for a full year (as per her rent/purchase agreement), she would have 12 payments of $1,000 (or $12,000) to apply to her down payment.

This works for all conforming loans, FHA loans and many jumbo loans.

The required documentation includes:

  1. A rental/purchase agreement, that clearly sets out the terms of the lease.
  2. Copies of canceled rent checks to prove rent payments were made for the last 12 months.
  3. A market rent estimate from a qualified appraiser.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167