Hardship for purchase of principal residence

[K2retire]

Client e-mailed asking if the down payment on a "rent to own" agreement will qualify as a hardship for the purchase of a principal residence. I'm not familiar with how that type of arrangement typically works or even if there is a "typical" arrangement. Any suggestions about what we should be asking?

[masteff]

You'd need to view the actual contract. Most of those are technically a "lease with option to purchase" with part of the monthly lease payment being applied toward the final purchase price. By virtue of it merely being an option to purchase, then it should not qualify for hardship.

[K2retire]

Thanks. Once I saw the contract it became clearer. It is a rental agreement, with an addendum for the option to purchase. The option makes it clear that there is no decision about a purchase until a specific date in 2014. And the deposit that they wanted for a hardship is non-refundable if they do not make the purchase.