I own a home In Minnesota and wanted to rent with option to buy. The question I have is if I get a downpayment from the renter, does that downpayment count towards their downpayment at closing? Or do I get to keep it and then they'll have to come up with another down payment?

In many contracts it's a lease with purchase option on the home. And you would agree to a price before you sign paperwork. The expectation being that a portion of the lease is to be used as down payment for the house. You have a 2 fold situation going on. The person leasing it could gain equity on top of the down payment making it easier to finance and for yourself it makes them easier to purchase therefore for you to sell the home. Typical lease price is adjusted for the term. So lets say a home rents or leases for 800 in your area. In this situation it might go for 1000 per month and the overage would apply to a down payment. Its not untypical for such a lease to own to run for a 5 year period.

Normally you don't get a "down payment" but a larger deposit or a deposit as with any lease or rental, and it is applied to the sell price at closing ( if you ever get to closing) the highest percentage of rent to own or even contract for deed, never actually sell, but are taken back by eviction when they fail to pay or violate the contract somehow.

So always go into this assuming you have to take it back, and that the home will be perhaps destroyed, when you sign that bottom line, do you protect yourself if in three years, you go in with holes in all walls, the air unit is missing and so on.
*** I have sold dozens of homes and this is not far fetched.


** edited, addition, and where do you think those dozens of homes I sell come from, from people who have either carried the note thierself, did contract for deed or rent to own, and came to find out there was 10's of thousand of damage to their home, carpet covered in dog poop, ( one was so bad, everyone threw up when they went in the home) many had windows all broken out, holes in walls and more. I buy them up, and upgrade and then sell them. The original owners did not have enough money to fix it up to resale it.

Make sure you have this rent with option to buy contract prepared by an attorney. Trust me, it's well worth the extra few dollars as it will be prepared properly leaving you ahead of the game when you have to evict them for nonpayment, etc. Trying to do a do it yourself contract never really cuts it in the end.