Lease-purchase mortgage loan

What is Lease-purchase mortgage loan?

An alternative financing option that allows low- and moderate-income home buyers 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 that is earmarked for deposit to a savings account in which money for a down payment will accumulate. Rent payments may also be credited to a future purchase under this type of arrangement.