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Would you please explain what is the difference between a home purchased for investment versus owner-occupancy

by heather_puge52 from Houston, Texas. May 15th 2015 Reply


Kenneth Kopper (KenKopper)
#1 ranked lender in Maryland - 519 contributions

Heather, a property purchased for owner occupancy would be a property that you intend to live in within at least 60 days of settlement. An investment property is a property that you intend to rent out. Another scenario would classify a property as a 2nd home where you intend to live in the property part of the year or use it as a vacation home but do not intend to rent it out. The difference to a lender would in the likelihood of default (risk) and therefore owner occupied properties require much smaller minimum downpayments as opposed to investment properties. Rates are also slightly lower on owner occupied transactions as opposed to a property that you do not intend to live in.

May 15th 2015
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Ralph Richard Guertin (ralph@absolutelowrates.com)
#137 ranked lender in Florida - 644 contributions

As far as the lending aspect, loan to value on a OO can go to 97% and IP typically goes to 80% and DTI limits are lower as well.

May 15th 2015
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Mary Papageorge (MaryPapageorge)
#95 ranked lender in Texas - 47 contributions

Basically all of the answers are accurate. A primary residence means you're going to live in the home within 60 days of closing on the transaction. You can get in with as little as 3% down or if you do VA or USDA it's 100% financing. An investment property requires a minimum of 20% down, but rates get better with 25% down and you intend to lease it to another individual for rent to cover your note, and possibly make some money. We have several options available for financing. If you're interested in learning more - please call me at 713-569-0025 -- Thanks! Mary Papageorge

May 15th 2015
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,225 contributions

Investment property (that you plan to rent) is considered a more risky loan and the downpayment required (15% or more) as well as interest rate are higher, and other qualifications are significantly more stringent. If you will be living full time in the home the requirements and rate are the best available. A vacation home you will occupy at least a few weeks out of the year will have about the same interest rate as a home bought for full time occupancy. If things get dificult, people will try harder to hang onto the home where they live so the terms are more flexible for owner-occupancy purchase.

May 15th 2015
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Elden Lewis (elewis_409_299)
#42 ranked lender in Indiana - 223 contributions

As everyone else has stated an investment property is when you will NOT be occupying. therefore, you will be renting for some financial gain, hence "Investment" property. Owner occupied is a property as the owner it will be your primary residence. My name is Elden Lewis with Guaranteed Rate in Indianapolis, IN. If you need any further assistance please feel free to reach out to me at 317-225-4868. https://www.guaranteedrate.com/eldenlewis http://www.indianapolismortgageguy.com/

May 15th 2015
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