How I bought my first home worth $100,000s with a rent-to-own program despite a bad credit score

HOMEOWNERSHIP is a dream for millions of Americans but it can seem out of reach if you are living paycheck to paycheck.

The dream for one North Carolina woman became a reality after some financial guidance through a homeownership program.

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Heather Torres became a first-time homeowner after lifting her low credit score

Heather Torres, 35, was renting in Greensboro for years.

She wanted to buy a place but a low credit score, combined with paying high rent, didn’t allow her to save enough for a down payment.

Determined, the single mom of two kids, ages four and 13, Heather tried house hunting but came across real estate agents who weren’t helping her understand what she needed to do to become a homeowner.

That’s when she connected with Landis.

Heather, now a first-time homeowner, told The Sun: “I learned about Landis from the real estate agent I was working with.

“She suggested I reach out to Landis after I could not get preapproved on my own due to a high debt to income ratio.”

It’s a decision that changed her life – Heather was on a new path to homeownership.

How the rent-to-own program works

Heather started working with the financial experts at Landis with the goal of becoming a homeowner.

She was able to get the financial guidance she needed, but the process wasn’t overnight. 

Heather, who works in the legal sector, had to see if she qualified for their program by filling out an online application.

Once she was accepted into the program, financial experts worked with Heather to budget how much she could afford.

Next, it was time to house hunt.

With a budget provided by Landis, Heather was able to go out and pick the home she wanted to buy.

Landis stepped in, placed an offer and bought the home for Heather.

While Landis declined to share how much Heather’s property cost, the homes Landis’ clients purchase range from $110,000 up to $400,000.

Landis takes care of all the appraisals, inspections and paperwork.

How much does it cost you?

Landis now owned the home Heather wanted to buy.

During this time, Heather rented it with the agreement to eventually buy the home from Landis.

Landis charges its clients market rental prices based on the value of the home.

To give you an idea of how much that will cost you, Landis provides a “home calculator” which will run the numbers as to how much you will pay in rent, followed by your mortgage payment when you complete the program.

The home calculator allows you to choose the area where you would like to live, provided Landis invests in that area.

Next, you can plug in the cost of the home, how much you will deposit, followed by how long you want to rent.

For example, if you choose to buy a $300,000 home in Indianapolis, Indiana, you will get a recommended down payment.

In this case, $9,000 was suggested.

The company allows people to rent for up to 24 months.

Here is the breakdown of payments based on the Indianapolis property:

Landis program (24 months)

  • Rent: $2,125
  • Savings for down payment: $301
  • Total per month: $2,426

Mortgage cost after the program:

  • As low as $1,750
  • Savings up to $375 per month with Landis

During the rental period, Landis’ financial experts will work with participants to improve their credit and save more money.

Tom Petit, co-founder, and co-chief executive at Landis told The Sun: “The core of Landis is actually not the rental program. It’s an important component of it.

“The core is the coaching that we give people. It’s about financial coaching, financial empowerment.”

Stanford grads, Cyril Berdugo and Tom Petit, co-founded Landis

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Stanford grads, Cyril Berdugo and Tom Petit, co-founded Landis

Landis sets aside a portion of the client’s monthly payment into a down payment savings account.

That money will be used for the down payment and closing costs.

If a client decides to exit the homeownership program after Landis purchases a house for them, Landis will reimburse the client the accumulated homeownership savings minus a 3% exit fee. 

This fee is to cover the cost to list and sell the home.

How Heather took ownership of the house

Landis and Heather agreed on the purchase price and a date when she could take ownership.

They built a financial plan allowing Heather to make two credit card payments a month which boosted her credit score faster.

Landis handled all the paperwork for the process, working closely with Heather to make sure she was budgeting correctly and meeting all the necessary filing deadlines.

Heather was able to submit a cash offer for her home which went a long way in securing her mortgage.

Last August 2021, Heather took possession of the home she was renting.

Heather said: “I feel accomplished being a first-time homeowner, especially being a single mom and being able to have a place for my kids to call home.”

Are you eligible?

Landis is operating in about 15 states in the South, Southeast, and Midwest. It operates solely on its homeownership program.

The application is free and available online or through their free app.

Landis explained it will approve credit scores as low as 550 with a $2,500 of monthly combined income.

Petit explained: “Based on the application, we’ll evaluate whether we’re in the right position to help them straight away and for most people, the answer is yes.”

Accepted participants will get a budget to find the home they would like to buy.

They’ll also get a financial plan outlining what steps which need to be taken to achieve homeownership. 

A financial coach will follow up on progress and troubleshoot any questions or concerns.

Most of the clients who come to Landis have low credit scores.

“People with 550s often have gone through difficult circumstances and what’s needed is a bit of a reset.”

Landis says it has successfully made the dream of homeownership a reality for thousands of families.

Its success caught the attention of celebrities, such as actor Will Smith and rapper Jay Z.

The men invested in Landis’ latest funding round in 2021.

It has raised more than $182million since it was founded in 2018.

For Heather, she’s happily living in her Greensboro home. 

Along the way, she needed some electrical work done. Turns out sparks flew between her and Alex, the electrician she hired. The two are now married.

What are the risks?

As with any major purchase or financial investment, it’s best to go into it well-equipped with the information you need so that you are not at risk.

For Heather, there was transparency with her rent-to-own agreement. She understood what she would be paying and for how long.

That may not be the case for everyone.

If you’re paying rent throughout the lease term, the question is whether a portion of each payment is applied to the eventual purchase price.

Treat the home buying process the same as you would if you were outright buying a home.

This means you need to do your due diligence, research the area, compare prices with other nearby homes, research the contract, and research the seller’s history.

We explain the states giving mortgage and bill support worth up to $80,000.

Plus, how to get mortgage relief through a federally-backed refinance program.

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