Many or all companies we feature compensate us. Compensation and editorial research influence how products appear on a page. Home Equity Home Sale-Leasebacks How Does a Home-Sale Leaseback Work? Updated Jul 05, 2023   |   4-min read   |   This article has been reviewed by a Certified Financial Planner™ for accuracy. Written by Jess Ullrich Written by Jess Ullrich Expertise: Banking, insurance, investing, loans Jess is a personal finance writer who's been creating online content since 2009. She specializes in banking, insurance, investing, and loans, and is a former financial editor at two popular online publications. Learn more about Jess Ullrich Reviewed by Rand Millwood, CFP® Reviewed by Rand Millwood, CFP® Expertise: Financial planning, investments, education planning Rand Millwood, CFP®, CIMA®, AIF®, is a partner at Guardian Wealth Partners in Raleigh, North Carolina. His firm assists clients of all ages and areas of life (with a strong background in the medical and legal fields) in planning, investing, and preparing for retirement and other financial goals. Learn more about Rand Millwood, CFP® If you have significant equity in your home and need fast cash, a home-sale leaseback is a way to tap into your home’s value. This option lets you access your home’s equity without taking on additional debt, and the process involves selling your home and then renting it back from an investor or buyer. Homeowners might like this option because they don’t need to find a new home to access the funds. They can continue living there without additional moving and homebuying expenses. We’ve researched how it works, the benefits, and the drawbacks. In this guide: How does a home-sale leaseback work?Why would homeowners use a sale-leaseback?Pros and cons of home-sale leasebackHome-sale leaseback alternatives How does a home-sale leaseback work? With a home-sale leaseback, you sell your home to an investor or buyer and lease it back for an agreed-upon term. Your home sale gives you access to its total cash value, and you can continue to live in your house as a renter. Depending on the leaseback agreement you work out with the buyer, you could live in your home for a short time or several years. Option 1: Short-term A short-term leaseback agreement could work well if you plan to move in the near term but need more time to find your next home. It will provide interim housing as you continue searching for a property. A home-sale leaseback agreement is possible with an independent buyer or a company. Sale-leaseback agreements with independent buyers are often short-term. For instance, your buyer might agree to rent your former home to you for a month if you need additional time to close on a new house. Option 2: Long-term If you prefer to live in your home for longer, a long-term home-sale leaseback might be appealing. You can keep living in your home, but you won’t need to worry about ownership costs such as maintenance, property taxes, and homeowners insurance. When you sign a sale-leaseback agreement with a company, it could be longer-term. Certain companies offer long-term leases of up to 12 months, with the ability to renew them for several years. The process of initiating a sale-leaseback will vary depending on whether you work with an independent buyer or company. With an independent buyer, you may work out an agreement with their real estate agent before you reach the closing table. But with a company, you’ll provide deals about your home, and it will make an offer. >>Read more: How to take equity out of your home Why would homeowners use a sale-leaseback? Home-sale leasebacks can appeal to homeowners in certain instances. For instance, you could access your home’s total value and use the funds to cover a large expense, repay a debt, supplement your retirement income, or invest. It may also be a wise choice if you’re unsure when construction will be complete on your new home and want protection against market downturns. These agreements have certain perks for purchasers as well. The buyer benefits from potential appreciation, and a long-term lease agreement offers predictable cash flow for a fixed period. Buyers may also get certain tax advantages, such as deducting the home’s depreciation on their tax return. Pros and cons of home-sale leaseback Before making a decision, consider the pros and cons. Pros Access to cash Working with a home-sale leaseback company could give you fast access to money to cover a large expense, build a business, and more. Close on the deal in just a few weeks. Fewer homeownership costs You may have fewer homeownership expenses, including maintenance costs, property tax payments, and homeowners insurance payments. Protection against market downturns If you expect your home to decrease in value, a home-sale leaseback could help you access its value before the housing market declines. No pressure to move fast A home-sale leaseback can help alleviate the pressure to hurry because you’ll occupy your existing home for an agreed-upon term. Cons Can no longer build equity When you sell your home to a home-sale leaseback company, you won’t build equity as you make payments the way you do with a traditional mortgage. Fees may apply You might pay processing fees, closing costs, and real estate commissions when you work with a home-sale leaseback company. Rent may be high Depending on the rental market where you live, your monthly rent could be expensive. And if you want to live in your home for several years, it could increase over time. No benefit from appreciation Because you’ll no longer own your home, you won’t benefit if it appreciates. You can’t access your equity or sell it for a profit in the future. Home-sale leaseback companies If you’re interested in a home-sale leaseback, ensuring you work with a reputable company is essential. Consider the companies below as you compare options. EasyKnockRentBackTrueholdCredit requirementsNo specific debt-to-income (DTI) or credit score requirementsNo specific DTI or credit score requirementsNo specific DTI or credit score requirementsProcessing fee4.99% of total home saleNot disclosedUp to 6%Time to closeAs little as 4 weeksAs little as 10 days30 days or lessMonthly rentCurrent market rentCurrent market rentCurrent market rentLease lengthsUp to 5 yearsCustomizableCustomizable Home-sale leaseback alternatives If you’re interested in accessing your home equity, but a home-sale leaseback agreement doesn’t sound like the right choice, options include: Cash-out refinance: Refinance your home with a larger mortgage to access cash. When you close on the new loan, get the lump-sum difference between your old mortgage and the larger mortgage. Home equity line of credit (HELOC): A credit line secured by the home that lets you access your equity. Use it as needed, and repay over a set term. This can be helpful if you’re unsure how much you’ll need to cover an expense.Home equity loan: A loan secured by the home that lets you access your equity. Unlike a HELOC, which acts as a credit line, a home equity loan is disbursed as a lump sum, and you repay it over a specific term.Reverse mortgage: A home loan available to individuals over age 62, it allows the borrower to access their home equity. The loan is often repaid when the owner or owner’s heirs sell the house.