Published 07-17-2019 by Rico Castillo

Wouldn’t it be great to finance a home even if you don’t have the best credit or not have enough money for a down payment?

To get in the game of homeownership, you'll have to finance a home. 

Photo provided by CreditRepairExpert

No, this is not a Subprime loan or a gimmick.  I wanted to get that out of the way.

I can already hear you thinking, “If it sounds too good to be true, it probably is.”  Am I right?  Did I nail it?

I’m here to tell you that this is a legitimate program and one I’ve used with my clients.

What This Program Is . . .

This program is a new and innovative way to finance a home.  You are financing your home for the future.

“What?” you say!

This is a lease-to-own program.  But before you click away, please read a little more about this great program because YOU - ARE - EARNING - EQUITY - WHILE - YOU - RENT!

Why Use This Program To Finance A Home - The Awesome Sauce

To appreciate this program, you have to think long term - about 2-3 years, which actually is not that long.  It’ll be here before you know it.

The reason why you have to look in the future is because this is a program that allows you to EARN equity while leasing the home.

This means you will have a very high chance of actually buying the home that you’re renting.

I’ll explain why and how below because . . . 


First let me ask you a question.

How would you like to buy a home using OPM (Other People’s Money) - sort of?

What do I mean?

It’s called Home Equity.

Let’s do a quick scenario . . .

Once you move in and in a couple of years (or three) the home has increased in value.  This is not guaranteed, but it happens more often than not.  And some years the value increases more than others.  In 2019, it’s expected that the property values will increase only 2 -3%. 

The last 4 years, however, the amount the property values have increased has been between 9% to 13% - depending on the price point.

Most of the economic experts predict that the market will slow down, in terms of appreciation.  However, it will continue to go up in value - just not as much or as fast.

Let’s just say that in 3 years, the value goes up by $15,000.

If you decide to buy the home at that time, the company will allow YOU to use that increase in equity towards your down payment and closing costs.

Let me say that another way - even if you didn’t save enough for a down payment or have no money at all for a down payment, but you have enough equity in the home that you’re leasing you, then you have a high chance of buying the home. 


Owning a home is the best to increase your wealth through equity.

Photo provided by Pictures of Money

YOU can apply that equity in the home you’re leasing towards your down payment and closing costs, thus increasing the likelihood of you actually buying the home.

Do you understand the significance of that?

That is pretty much FREE money that you can use when you are ready to finance a home.


What are the Pros and Cons of this program, you might ask?  Here they are: 


  • Build Equity while Renting
  • Fixed interest rate for 30 years
  • Protect you from rising rates and lower qualification
  • Use Equity when you finance a home in the future
  • Assumable loan and keep the equity


  • Purchase price is slightly higher (they are a FOR profit company so they have to make a little money, right?).  The company will charge you 1% above what they purchased the home for.

I say the Pros outweigh the Cons in this new innovative way to finance a home.

Your Qualification For The Program

The base qualification is your credit score and your debt-to-income ratio.

You have to have a “middle” credit score of 580 or higher.  This guideline may change at any time without my knowledge and I will update as soon as I find out.

This is your goal and the new innovative way to finance a home can help you get there.

Photo provided by

The middle credit score is your middle score from the 3 credit bureaus.  When you finance a home and apply for a loan at the local bank, they also use the middle score for their qualification.

The debt-to-income ratio is how most of the loan pre-approval amounts are calculated when you apply for a loan to finance a home.

Your debt-to-income ratio is exactly what it says - how much you owe in proportion to how much you gross a month. “You” means your entire household (everyone that is 18 years or older who will be living in the household).

This is sometimes hard to calculate, if you’re trying to calculate on your own.  The reason is you don’t fully know what your debts are.

“What?  I know exactly what I owe.” you might say.

You may, however, sometimes, and it happens more often than not - when your credit is pulled there may be something in there that you’ve completely forgotten that will count towards your debt total.

Those items may be legitimate or not.  If they’re not, then you can dispute them and have them removed so it won’t count towards your debt total, which improves your debt-to-income ratio.

If they are legitimate, however, then you’ll qualify for less than what you probably thought you would or should.

So, before you finance a home, think about calling all 3 credit bureaus and ask for a free copy of your credit report to see what’s in it.  You can get a free report once a year from the bureaus.  The report won’t include your credit score, but at least you’ll know what’s in your credit report and your can dispute any errors beforehand.

I highly recommend this step.

The Property’s Qualification For The Program

Yes, the property has to qualify as well.  The program uses and FHA loan to finance the purchase.  FHA requires that the property has no health and safety hazards for the buyer or potential health and safety hazard.  This is determined by the appraiser.  If the appraiser sees any items that could pose as a health and safety issue, then those items are required to be first repaired before closing on the transaction.

The program added some of their own guidelines to the qualification list.

The property must be:

  1. Away from Power Lines
  2. Away from active train tracks
  3. Away from airplane flight paths
  4. The property to have upgrades (they prefer that the home is 10 years old or newer, but as long as it has been upgraded, it qualifies as well)
  5. The owners must repair Sections 1 and 2 of the termite inspection reports.
  6. The seller MUST assist you with credit towards your closing costs and down payment.  The company requires 3% of the purchase price as the amount of credit, but if can be less if you want to contribute towards this, then the seller won’t have to credit you as much, which makes it easier for our offer to get accepted

The additional guidelines the company added is good for them and for you.

They want the property to be in good shape when you move in so you won’t have to do any repairs and it will help the property keep it’s value.

And that’s a good thing!

Let’s do a scenario from start to finish . . .

Continued to Part 2

You are here:  >  Buyers >  Buying a Home Part 1  > Finance A Home Part 1

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About the author: All of the articles in this site were written and provided by Rico Castillo (DRE# 01234643) with Coldwell Banker.  If any information is provided by another source, such as the local MLS or by Metrolist, then a disclaimer will be on that page.

Rico can be reached by cell at (916) 934-3146 or email at   Visit his YouTube Channel at

My aim is always 100% client satisfaction by helping you accomplish your real estate goals and finding you the home you've Dreamed about in the area you and your family can feel proud and safe to live in!