Okay. You're qualified, entered into the lease purchase agreement and are renting to own. Your credit is in good shape and now you're ready to exercise the option to purchase. This page covers the steps regarding financing involved in becoming a homeowner. This page is divided into 2 sections: Pre-Approval and Financing. The Pre-Approval section covers the steps involved in obtaining the financing and the Financing section discusses different types of financing arrangements (e.g. conventional financing although there is a section on private lenders as well).


First off, the definition:

'Pre-approval is a more in depth assessment of the amount that a person can afford to borrow and is done by a financial institution that will state the maximum amount that it would lend to the borrower.'

It is also an evaluation of a potential borrower by a lender that determines whether the borrower qualifies for a loan from the lender, or the maximum amount that the lender would be willing to lend. The pre-approval process involves a thorough look into the income and expenses of the borrower, including a look at the borrower's credit report and score.

The pre-approval process also involves a confirmation of income and a credit check on the borrower. As long as no major income or credit changes occur between the time of pre-approval and the actual purchase of a home (e.g. the closing), the dollar amount of pre-approval can be expected to remain the same. The process may take anywhere from a few minutes (for an online lending application) to a couple of weeks. A non-refundable fee may be charged for the process.

A pre-approved mortgage is still subject to review once a specific property has been chosen, so the dollar amount is not guaranteed. A pre-approval may be lowered or even revoked if the property in question may be difficult to resell in the real estate market due to preconditions, location and other factors.

Now the reason why pre-qualification is considered "worthless" towards the actual obtaining of financing and pre-approval what you want to get is because this aforementioned pre-qualificationis based on information regarding income, assets, employment and credit report/FICO scores provided by the buyer while pre-approval consists of Uniform Residential Loan Application form 1003, credit report(s) and FICO scores, Automatic Underwriting System (AUS) findings and supporting documentation. Also, a pre-approval letter is usually good for 60-90 days.

For this reason, we recommend for you to apply for pre-approval at least 3 months prior to the option expiration date. This combined with the 6+ month "cushion" between the credit restoration completion date and the option expiration date allows enough time to exercise the option to buy and set a closing date without requiring an extension or renewal.

Also, our pre-approval process permits you to shop for a home with a higher degree of confidence. Below is a list of documents needed to allow us to establish the loan amount for which you qualify. It will also help you to meet your contingency and closing date requirements.

Mortgage Checklist


  • Federal Tax Returns: Last 2 years - complete with ALL pages and
    schedules (state returns are not needed).
  • W-2's: Last 2 years (1099's and/or K1's, if applicable).
  • Pay stubs: Most recent consecutive pay stubs (must cover
    minimum 30-day period).


  • Bank Statements: 2 months of most recent bank statements with
    ALL pages.
  • Investment/Retirement Statements: Most recent 401K and/or IRA


  • Copy of Driver's License for identity verification (Permanent
    Resident Card or Visa, if applicable).
  • Copy of gift checks and deposit slips.
  • Copy of listing and binder/contract (we can get this form for you).
  • Mortgage statement showing taxes and insurance for all properties

(Click here to download the above checklist.)


Next, there is the actual obtaining of the funds necessary to purchase the property. This step to home ownership involves the steps after pre-approval including such things as appraisals, the financing arrangement and loan commitment (plus insurance and other closing procedures such as title searches). This section, being about financing, shall cover different types of financing arrangements/mortgages.

Our mission here at DR Investment Properties ("Dr. I") has been to find solutions for those with credit issues or otherwise. That being said, we have searched many "haystacks" for "needles", namely credit issue specialist lenders and what we have assembled here is "Dr. I's "Golden Needle" Lending Team" as these aren't just ordinary "needles" but instead, "needles" made of gold !

All lenders on our team have been pre-qualified. After all, these are "golden needles" and we aim to provide you with nothing less !

And now, a discussion of the details of these arrangements...

Golden Needle

Below are our recommended lenders. Each offers something unique to get you financing where others 'no'. These include low credit score loans and down payment/closing cost assistance programs.


River City Mortgage

Why use River City Mortgage ?

  • USDA and VA loans (100 % financing) with credit as low as 500
  • FHA loans with credit as low as 580 (3.5 % down required)
  • FHA loans with credit as low as 500 (10 % down required)
  • Unique manual underwriting services designed to approve difficult situations (including self-employment)
  • Closing cost assistance
  • Low interest rates

North Point Mortgage

Why use North Point Mortgage ?

  • Specialists dedicated to get you the best possible loan terms
  • 203 K loans available
  • Low interest rates
  • Fast service with detailed progress updates
  • Closing cost assistance


Thomaston Savings Bank

Why use Thomaston Savings Bank ?

  • CHFA loans (600 or better credit required)
  • Only 3 % down required
  • No Private Mortgage Insurance (PMI) required
  • Appraisal fee rebate at closing
  • Only 1 year employment time required
  • Non-traditional or limited credit history okay (including self-employment)
  • Low interest rates

HDF (Housing Development Fund)

Why use HDF (Housing Development Funds) ?

  • Down payment assistance (650 or better credit required)
  • High DTI (Debt-to-Income ratio) loan programs
  • 100 % financing (non-VA) loans
  • Home buyer counseling, education and lending services
  • Closing cost assistance
  • Investor programs
  • Low interest rates

ACC (All Credit Considered) Mortgage

Why use ACC Mortgage ?

  • No minimum credit score owner-occupied loans available
  • High DTI programs
  • Bankruptcies, foreclosures and short sales okay
  • Closing cost assistance
  • Foreign national programs
  • Investor programs

To get in touch with any of our "golden needle" lenders,


And now on to non-conventional financing...

Private lenders are individual(s) or entities in the business of lending capital for investments secured through various means such as real estate. Examples of private lenders are personal investors (individuals or groups of individuals (for example, friends and family) with access to capital directly or by pooling resources together who fund loans) and companies that manage their own capital and issue loans similar to conventional bank loans.

Seller financing (also called owner financing) is another example of private lending. A typical seller financed arrangement (also known as a 'contract for deed' or 'land contract') is a 30 year term mortgage with a balloon payment due after a much shorter time period, typically 2-10 years. Often, this can help buyers who do not qualify for conventional financing to obtain a conventional loan through a re-finance (on or before balloon payment due date) which is often easier to obtain than initial financing. In the case of option exercising in a "rent-to-own", it is possible to purchase the property through seller financing ! Not all sellers offer this option but many would rather keep their buyer in the property rather than lose the deal. After all, they would still be making income on their investment property in the form of monthly payments but instead of rent, mortgage payments to them. They, in essence, become the bank ! Once again, its also important to note that by purchasing the property through a seller financing option after exercising the purchase option, it could make the eventual re-financing easier than obtaining conventional financing to purchase the property. In a way, its kind of a 'safety net' in case any financing issues should appear at time of option exercise. On the re-finance, any possible issues could be cleared up and on top of that, you would get more time than the typical 1-3 year option term. This time could be used to improve financial and credit situations further and on top of that, since you would be paying a mortgage and not rent to the seller, the principal due on the house would start getting paid off. This means you would gain equity at time of re-finance.

It is important to note that the interest rates are generally higher than that for conventional loans (many private loans range from 4-10 %) but it is also important to note that in some cases, a private loan may be the only solution. The end justifies the means !

However, finding a private lender may be difficult, perhaps more difficult than you may think and finding the right private lender can be like finding a needle in a haystack. This is because private lenders often serve specialty niche markets, are smaller companies (or just private individual(s)) and work mainly on referrals and word of mouth.

As we have done with conventional lenders ("Dr. I's Golden Needle in a Haystack Lending Team"), our aim is also to help you find that right private lender ! Although it may take a bit of effort to find that right private lender, it is usually worth it. You'll be glad you did !

Below is a list of resources to learn more about private lenders and their non-conventional financing arrangements and also to find such lenders. Remember though, private lenders that do owner occupied loans are some of the most difficult to find and searching for them is often considered to be like "finding a needle in a haystack". However , in the case of these "needles", they're not just gold, they're "platinum" - the most in demand, the hardest to find.

Here at DR Investment Properties (aka "Dr. I"), our mission is to find the best possible solutions to whatever issues are presented and we are always working to locate and pre-qualify new lenders. In other words, finding that "needle in a haystack" and seeing what its made of. Is it made of Silver ? Gold ? Platinum ? or is it rusty ?

As things develop more, the number of 'golden needles' (or better) in our team will increase. So keep an eye out for these future updates. We can also notify you by phone or email with progress on any new developments. If you are an investor and are or wish to become a private lender, please fill out and submit our Lender's List form or CONTACT US.

Below is a list of resources to help educate you, the buyer, on how private lending works (plus some 'haystacks' to search for 'platinum needles' in !


What is the PMLG (Private Money Lending Guide) ?

It is an excellent educational resource to learn about private lending for both borrowers AND for investors that wish to BECOME private lenders. They are also a private lender resource for lenders across the country (including CT) for a wide variety of loans (30 types in all).


What is the Private Money Goldmine ?

A private lender referral service specializing in finding those "needles in haystacks" all across the country (including CT). Their service is not free ($97 up front + $29/month) but they have a money back guarantee if unable to borrow from any of the lenders that they provide.


So, when you're ready to buy that home you've been renting-to-own,


and we'll get you started on the pre-approval and financing process !!!