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Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes

6d

If you are purchasing the property as an investment property as a non-owner occupant and using DSCR financing, no you should not be shopping for owner-occupant financing. Getting owner occupant financing for an investment property is mortgage fraud.

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Adam Summerer

Lender · Franklin, TN · Member since 2026 · 59 posts · 10 votes

5d

Tell the lender it's an investment. You already have a primary and the Section 8 tenant is staying, so calling it owner-occupied to get a better rate is occupancy fraud, and that's the kind of thing that gets a loan called. DSCR is a good fit here anyway, most programs go up to around 80% on a purchase and they'll qualify you off that in-place lease. Just run it with the full $5,300 a year in taxes, on a $180k house that line moves the ratio a lot, and on a FSBO get a title company involved early.

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Austin GoetzBusiness Member

Lender · Minneapolis, MN · Member since 2026 · 30 posts · 10 votes

4d

You will want to tell the lender it is an investment property. DSCR financing is only eligible for investment properties so if that is the loan you are targeting you have to go that route. If you are looking to run through the numbers on what that type of financing looks like or need a second opinion, feel free to reach out.

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Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

4d

Misrepresenting occupancy on a FNMA/FHLMC/FHA/VA loan is a FEDERAL OFFENSE.

Why would you risk a felony charge?

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Dustin TuckerBusiness Member

Lender · Savoy, TX · Member since 2020 · 195 posts · 80 votes

3d

Tell the lender it's an investment property. With a Section 8 tenant already living there and no plan to move in, calling it a primary residence would be misrepresenting occupancy on a loan application, which is mortgage fraud. It can lead to the loan being called due, and in serious cases criminal penalties. It's not worth it, and you don't need to do it.

The good news is a DSCR loan is built for exactly this. It's a business-purpose loan for rentals, and it qualifies on the property's rent versus the payment, not your personal income.

For your deal:

1) Run the DSCR. Divide the Section 8 rent by full PITIA (principal, interest, taxes at roughly $5.3K a year, insurance). On a ~$180K purchase with 15 to 25 percent down, see whether the ratio clears about 1.0, and ideally 1.2 or more.

2) Use the existing lease. A current Section 8 lease and HAP contract help document rent.

3) Plan the down payment. Investment loans typically need 15 to 25 percent down plus closing costs and reserves.

4) FSBO details. Use a title company or attorney, and get the lease and tenant ledger.

5) If you ever plan to live in a property, buy a different one that's vacant and use an owner-occupied loan.

What's the current Section 8 rent on the property?

Another option, if you're ever considering a short-term rental: DSCR loans for short-term rentals/vacation homes allow you to stay in the property up to 30 days a year and rent it out the remainder of the time.

Hope this helps.

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Arman AhmedPro Member

Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 942 votes

3d

Quote from @Jamarius Everett:

I’m interested in purchasing an investment property in Calumet City, Illinois. The property is a three-bedroom, one-bathroom single-family home that appears to need only minor repairs. It is currently occupied by a Section 8 tenant, and according to the owner, the property is up to code.

The owner would like to complete the transaction as a For Sale By Owner (FSBO) deal but has not provided me with a purchase price yet. The home is currently valued at approximately $180,000, and the annual property taxes are about $5,300.

When I go to the bank to get pre-approved, should I state that the property will be my primary residence in order to potentially receive better loan terms, even though I already have a primary residence? Or should I let the lender know that this property will be used as an investment property?

The type of financing I am currently considering is a DSCR loan.

I'd be upfront with the lender and call it an investment property. Claiming it as a primary when you already have one could create bigger problems than the better terms are worth. With DSCR, I'd focus on the actual rent, taxes, insurance, and cash flow to see if the deal works. If you're open to looking outside Chicago, I'd also compare some Midwest markets where lower purchase prices can sometimes make the numbers pencil better.

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Aaron ZimmermanBusiness Member

Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes

3d

You should let the lender know it’s an investment property. You’re committing mortgage fraud otherwise.

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Ashish AcharyaBusiness Member

CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes

3d

Jamarius, I would absolutely tell the lender the property will be an investment property. I would not represent it as your primary residence when you already have a primary residence just to get better loan terms. That can create much bigger problems than the difference in financing costs.

Since the property already has a Section 8 tenant and is intended as a rental, I'd have the lender underwrite it as an investment and compare the DSCR option with any conventional investment loan you qualify for.

I’d also look beyond the purchase price and mortgage payment. With roughly $5,300 in annual property taxes, I’d want to include taxes, insurance, maintenance, vacancy, management, and any owner paid expenses when evaluating the actual cash flow.

From the tax side, I'd also make sure the purchase, existing improvements, and future repairs are properly documented from the beginning. Once it is a rental, depreciation and the proper allocation of expenses become part of the return calculation. And if you are buying it as an investment, I would not assume putting it in an LLC automatically creates tax savings. The tax treatment depends on how the property and entity are structured. Feel free to DM me, I'd be happy to send over a few resources that may be helpful.

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Gregory AcsPro Member

Lender · MD · Member since 2025 · 203 posts · 78 votes

2d

Hi Jamarius,

I would be upfront with the lender about how you intend to use the property. If you already own and live in another primary residence, representing this purchase as a primary home when it’s actually an investment property can create problems later in the loan process.

Since you're considering a DSCR loan, it's worth comparing that with other investment property financing options before making a decision. The best choice depends on your financial profile, down payment, and long-term goals.

I’d also make sure you review the existing lease, Section 8 paperwork, property condition, and operating expenses before finalizing the purchase.

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