I don't qualify for a mortgage -- can I do a lease to own?  In 2005 Texas enacted tough laws governing lease to own transactions that made them subject to strict regulation under the code.  Many experts advised landlords against doing lease options because of the complexity and stiff penalties involved for violations.  

Moreover, the demand for lease to own properties were not as high because many buyers could qualify for a mortgage.  However, tighter lending guidelines have now prompted more buyers that can't qualify for a mortgage to look at lease to own options.  Here are some things to consider if you decide to pursue a lease to own transaction:

1. Lease Amount & Purchase Price - The lease amount and price of the house should be fair. You should expect to pay slightly more per month to help with the final downpayment.  But the lease amount should not be excessively high nor should you agree to buy any house at a price that doesn't reflect the market.  Additionally, you should make provisions in case the appraisal comes in lower than the agreed purchase price.

 3. Option Fee  - Option fees are negotiable.  You should negotiate the lowest possible option fee that you are comfortable with, but it should not be more than 3% of the sales price.  Also, the agreement should stipulate who gets the option money if something goes wrong with the deal. 

4. Time Period  - How long should the lease option be?  It depends on how serious your credit problems are.  Do you feel you can raise your credit scores within the 12 to 36 months lease period?   If you unsure about the answer, then you should not be doing a lease option.

5. Seller's Ownership -  Request proof from the seller that he has clear legal title to the property.  If you enter a lease option and the bank forecloses on the property, you may find yourself getting evicted by the bank with little recourse.  

Finally, because of all of the legal ramifications involved in a lease purchase  including the possibility of seller default,  you should find a good real estate lawyer
to review any agreement proposed before you sign it.