What does "occupy as your primary residence" mean?

Question

Hello BP Community,

Recently, I've been getting mortgage quotes from different banks/lenders, and I've noticed a repeating question. They all ask me if I intend to use the property as a primary residence. Or in other words, if I intend to live in the property.

I plan to buy a multi-family property. Live in one unit and rent out the others. However, I only plan on staying in the property for one or two years before moving to a new home.

Do I have to live in the property for the entire loan term (i.e. 30 years), else have my loan revoked? How many years must I live in the property before I can buy and move into a new one?

Matthew Kwan · Answer

In theory, once you acquire the property as a primary residence, you will have to move into that house within  30 days. However, you do not have to live into that house for 30 years. You can vacate your primary house and convert it into a rental/investment property after 12 months. Once you vacate your old primary and covert it as an investment, then you can cont. buying your next property as a primary residence with low down payment and lower rates than investment property.

@Albert Bui @Carlos Valencia

Chris Seveney · Answer

Not an attorney - typically it is defined as moving into the property 60-90 days after closing and living there for a year.

Erik Estrada · Answer

What kind of loan is it?

Most lenders will want to verify that you plan on living in the property for at least a year on a primary residence loan. If you are a first time home buyer, it may not be as difficult to satisfy this requirement... However if you currently own, and plan on buying another primary and use the other as a rental, that's where lenders will want to verify that the new property is an upgrade from your prior property. There has to be a reason as to why you are moving.

Dave Skow · Answer

@Jonathan Feliciano- thanks - you are fine and will be OK for a loan to be done as a primary residence even if you plan to live there under 2 yrs

Stephanie Medellin · Answer

Typically you'll have an occupancy clause in your loan documents stating you must occupy the property as your primary residence within 60 days of signing your closing documents, and must continue to live there for at least one year. Verbiage could vary from state to state, or lender to lender, or by loan type, so you can always check with your lender if you're concerned.

Cam Schwartz · Answer

Hi Jonathan,

With conventional financing you shouldn't need to live in the property for more than one year. Lenders have to meet additional regulations if you plan to live in the property which is likely why you are continuing to get that question.

JD Martin · Answer

Well it depends on your loan terms. Generally they're not going to call your note if you've been living there for several years; they likely are reselling your loan to the government, which requires certain residency. The main point is that the government isn't propping up investors rather than residents.

What does "occupy as your primary residence" mean?

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