Borrower Classifications

The following is a list of the three different types of borrower classifications and how they are defined:
Owner Occupied:

• Also known as primary residence
• Eligible for homestead exemption
• This is the home where the borrower lives
• Co-borrower can be non-owner occupant, but program restrictions apply
  

Non-Owner Occupied:

• Borrower does not live in this home
• Property can be rented (also known as investment property)
• Sometimes a family member lives in home (son/daughter at college)
• Is not eligible for homestead exemption
• Must do a conventional loan with at least 15-25% down depending on FICO scores
• Difficult to get PMI
• Difficult to obtain 2nd liens
• Must have strong cash reserves remaining after loan closes
• Must count full payment and cannot offset with a new lease
• Rate is higher than owner occupied
• Maximum seller contribution is 2% of sales price

Second Homes:

• Typically in a vacation area
• Property cannot be rented
• Can be purchased if borrower stays in the home on a part-time basis with
  the intent of moving into the home at a later date
• Rate and down payment may be higher that the primary home
• Not eligible for homestead exemption