Tenant-buyer is locked in but I still have not decided what happens if she can't get a loan at month 18

The assumption doing the most work here is that 620 to 660 is an 18-month problem. It may not be. Depending on what is pulling her score down, that gap can close in 6 months or it can stall for 36. Before you build a mechanism, find out from the broker whether there is a concrete remediation plan with dated milestones, or whether 660 is just a target with hope attached. Those are structurally different situations.

On the extension question: building a conditional extension in at signing is cleaner than negotiating it under pressure at month 17 when you have no leverage and she knows it. The risk you named, giving her permission to coast, is real but manageable through design. If the extension is automatic or cheap, it functions as a backstop and she will treat it that way. If triggering it requires her to demonstrate documented credit progress at a defined checkpoint, say month 12, and comes with a meaningful cost, higher strike price, option consideration top-up, or cessation of rent credits as you noted, then it is a tool that rewards progress rather than subsidizing inaction.

The risk you did not mention is what happens at month 24 on the seller side if your tenant-buyer exercises the extension and then still does not close. You now have a six-month cushion between her deadline and yours. A six-month extension on her side eats that entirely. You would be performing on the seller's contract with no closed buyer and no time to remarket. If you write in an extension, the outer boundary of that extension needs to land inside your seller window with enough room to re-tenant or refinance out if she walks.

Wording it without it reading like you expect failure is a documentation question, and that is something to work through with a real estate attorney familiar with lease option structures in North Carolina, since option enforceability and required disclosures vary by state.

What does the broker's remediation timeline actually look like, and is it in writing?

The extension language is worth putting in, but every time I have seen it written as automatic, you hit month 18 and you get six more at the new terms, the tenant-buyer treats month 17 like month 8. What actually moves people is tying the extension trigger to a documented benchmark, not just a calendar date. Something like: extension is available only if she can show a tri-merge from month 15 at 645 or above, and the request has to be in writing by day 455. Now she has a reason to pull her credit at month 15 instead of month 18.

The credit bump stopping is the right lever but I would not drop it completely, I would cut it to fifty cents on the dollar during the extension window. She still has skin in it, you still have a cooperation incentive, and you are not gifting her six months of full credit toward a purchase price she may never reach. The higher strike alone does not do enough if she is already stretching to hit the original number.

What I have never seen work is the verbal side agreement where the investor says "we'll figure something out" and does not document it. What happens instead is month 18 arrives, she has a 641 and thinks you shook on an extension, and now you are in a conversation about whether she has equitable interest. Greensboro is Guilford County and North Carolina courts have gone different directions on that depending on how the agreement reads. Get the extension clause in the original document with the trigger, the timeline, and the modified credit terms, all of it.

What does the broker say about her trajectory month to month right now, is she actually moving, or is 620 where she has been sitting since you started talking?

My lease option blew up in month 14 exactly because I had no extension mechanism and the tenant-buyer's score stalled at 612. She went quiet, I panicked, and I ate the spread trying to unwind the sandwich fast enough that the seller didn't come after me. Cost me about $11,000 net when you count what I gave back to get out clean.

On your worry about the extension giving her permission to coast, I had that same fear, which is why I didn't put it in, and that was the wrong call. Tie the extension trigger to documented credit action, not just the calendar. Something like: extension is only available if she can show she worked with a HUD-approved credit counselor and her score moved at least 15 points from the baseline you record at signing. That way the backstop exists but she has to earn access to it.

What's your exit if month 24 comes and neither she nor a replacement can close? Are you prepared to take the property yourself or bring in a cash buyer at a discount, because that six-month cushion sounds like enough until you're actually in it.