Posted by B.L.Renfrow on December 08, 1999 at 12:10:02:
You are partially correct; lenders will generally only recognize for downpayment purposes the amount of rent over and above the average area rent for similar properties.
However, this does not mean they will not do the deal. You can just apply the agreed-upon rent credit to the purchase price rather than the downpayment, just as with any option consideration you receive.
If your T/Ber does a refi when they exercise, downpayment won’t be a consideration. There are plenty of mortgage brokers out there who will do these with a good payment history for 6-12 months.