Qualifying for a mortgage loan is not the easiest thing to accomplish, especially if you've had troubles with your finances in the past. However, this does not mean you cannot buy a house. There is an alternative way to buy a house, and this is a great option for anyone who cannot currently qualify for a loan. This method is called a lease purchase, and it involves renting a house for a period of time before you actually get a loan to buy it.

How is this like buying a house?

When you buy a house through a lease-purchase, you basically get all rights to the house, and you take over all responsibilities for the house. The person who owns the house continues to hold the loan in their name, but you will make monthly rental payments to him or her. The seller of the house may agree to apply a portion of your rental payments to the principal balance of the house (the purchase price), which means you will be paying down the balance you owe the seller as the months go by.

You will have to pay for all repairs and maintenance on the house, and you may even be responsible for paying the property taxes. In addition, you will have to put a down payment on the house before moving in.

What are the terms of a lease purchase?

When you purchase a house through this type of deal, you and the seller can negotiate the terms. There are a lot of things you must negotiate before settling the deal, and here are some of the main ones:

• The purchase price
• The monthly rental amount
• The amount per month that will be applied to principle
• The length of the contract, which refers to how long you will rent the house before getting a loan to buy it
• The responsibilities of each party
• The down payment amount

If you can find a person willing to sell their home through this method, you could become a homeowner now, even if you do not qualify for a loan.

What risks are involved?

As the buyer of a house through a lease purchase, there are several risks you take on. The first is that the seller will fail to make the mortgage payments and the lender will foreclose on the house. If this happens, you would have to move out and sue the seller for the money you paid him or her. The other risk is that you will lose your down payment if you fail to get a loan by the end of the contract date.

If you are interested in buying a house through this method or any other, talk to a real estate agent to help you find a house to buy.