Owner Occupied Financing

7 Replies

I have a 4-unit property, that I got investment financing on from a major bank: 25% down, 4.75% interest. I have a pretty unique work situation -- I travel and stay in hotels 95% of the year, so I don't need a "permanent address" and wont for the next ~3 years (and I just stay with my parents during down periods while I am not traveling).

So my question is, could I refinance this property into "owner-occupied" financing if I simply list it as my permanent address or do I physically need to occupy a unit (for the 10 days a year when I am home). I'm assuming the bank will need a copy of the tenant list and would want to see one unit totally vacant with my name on it... meaning I would only be able to rent 3 of the 4 units out until a year passes by and then i could start renting all 4 again.

To be blunt about it, I want to qualify for owner-occupied financing on my 4-plex, and rent out all 4 units -- does anyone know if this is possible? And because I travel for work all year, I don't actually need a place to live.

It's possible, but it's also called mortgage fraud.

You may be able to get away with long term (standard 12 mos) leases on 3 units and then AirBNB on the furnished 4th with time held back for your own use, but that's about as far as I'd push it.

I hope that helps, and sorry to crash the party.

- JM

There's nothing stopping you from doing it, but you would be violating the terms of your mortgage and subject to default if the bank wanted to call it. If you were to go ahead, I think you might as well rent out the 4th unit. I've posed this question to two mortgage bankers in person and both suggested that nothing would happen as long as you made your payments on time. I've also read posts from other people claiming that the banks "verify" your owner occupancy but I don't whether that actually happens in reality.

Do you mind sharing what bank is providing your 4.75% investment loan? That seems like a pretty good rate, so you may not benefit that much from owner occupied financing.

@Eric Bunratty You could do it, but should you?  As mentioned above, it's mortgage fraud.  You aren't helping your chances of not getting caught by asking this question on a public forum.  Honestly dude, just crash in the unit for the 10 days you're home.  Chasing the fast nickel can land you jail time/and or fines.  Just chill and wait for the slow dime.

Could you rent 3 units at market rate and have a roommate in your owner occupied unit. Obviously you would need to be there when in town, but a roommate might check all the boxes. You should consider, however, the cost of the discounted rent for a roommate or a vacant unit prior to analysis en lieu of of investment financing. The investment financing, even with a higher rate, could give you a better return. And a way higher return if you consider the cost of doing something ethically or morally wrong.