What type of arrangement allows renters to build down payment funds while paying rent?

The arrangement that enables renters to build down payment funds while paying rent is a lease with an option to buy. This type of agreement allows a tenant to rent a property with the additional option to purchase it at a later date.

Typically, a portion of the rent paid may be credited towards the future purchase price, which helps the tenant accumulate a down payment. This arrangement benefits individuals who may need time to improve their credit scores or save for a down payment but are interested in purchasing the property at some point in the future.

In contrast, a standard lease agreement does not provide any option or commitment to purchase the property at a later date, nor does it typically allow for the accumulation of funds toward a down payment. Similarly, a month-to-month lease offers flexibility for renting without any plans for purchase, and while a rent-to-own agreement can also involve building equity, it is typically more structured than a straightforward lease with an option.