These programs allow borrowers to buy a multi-family property of up to four units, provided the borrower lives in one unit as their primary residence.Īs a popular approach for new real estate investors, it also has many advantages: If there are documents to support the move, this should not trigger any reprisal from the lender.Īlthough owner-occupied loans and investment properties seem mutually exclusive, buying an investment property with an FHA or VA loan is possible. Intent MattersĪlthough lenders can call the loan and refer the borrower for criminal prosecution if the borrower does not fulfill the 12-month occupancy period, they usually consider the borrower’s circumstances before deciding to act.įor example, if a borrower has to relocate because of a job before the year is up and decides to rent the house instead of selling it, there is no intent to commit fraud.

In addition, mortgage fraud is a criminal offense carrying fines of up to $1 million and up to 30 years in prison if convicted. There are steep penalties for borrowers who file false certifications lenders can call the loan and foreclose if the borrower cannot pay. The real estate agent also signs the form and files it with the sales contract.

The borrower must occupy the home as their primary residence for 12 months.īuyers sign a HUD-9548D, which is an Owner-Occupant Certification form.

The borrower will move into the home within 60 days of closing.

Lenders expect two things when they make loans on owner-occupied homes: There are usually lower down payment requirements and lower interest rates when a borrower is financing a primary residence. When it comes to conventional loans, owner-occupied properties usually get more favorable terms than loans for investment properties. VA and USDA loan programs are also reserved for owner-occupied properties. The Federal Housing Administration (FHA), for example, will only insure owner-occupied homes.

Owner-occupied status is an important consideration when financing a property.

What does occupied mean