28 Years of Lending Experience

  • (800) 559-0345

Understanding Owner-Occupied Loan Requirements

As with any loan journey, knowing what to expect when beginning your journey with owner-occupied loans is crucial to starting your borrowing process. Owner-occupied loans can be a great way to foray into the real estate field, especially as a new homeowner. Knowing how to utilize owner-occupied loans, while being informed with the knowledge you need can give you a competitive edge in a tight housing market. In the article below, you will find the critical information you need to be prepared for your real estate journey.


6 Things Borrowers Should Know About Owner-Occupied Loans


  1. What are they?

Owner-occupied loans are loans allocated toward properties where the borrower will reside. As suggested in the name, owner-occupied loans are tools for primary residents of a certain property. They allow borrowers to have an advantage in the form of cash flow for purchasing a property in a competitive market. Owner-occupied may also open doors for other benefits such as property tax cuts and homestead protection.


  1. Who are they for? 

Owner-occupied loans are for anyone seeking to buy a property where they will be the primary resident. This means that the borrower plans to reside in the home at least 70% of the time, which is signed in a legal agreement before the borrowing can take place. First-time homeowners, or those without robust personal financial history can especially benefit from this loan. 


  1. Who are they not for? 

Owner-occupied loans cannot be applied to any property where the owner is not the primary resident. Second homes, vacation homes, investment properties, or homes for beneficiaries do not count as owner-occupied. This is important to make note of as failure to comply with these stipulations can constitute fraud.


  1. Am I ready for one?

If you are someone looking to purchase a property to reside in, along with a solid repayment plan, you should be ready. Learning all about what to expect with owner-occupied loans and informing yourself with knowledge about the market can be your best bet to successfully obtaining an owner-occupied loan. 


  1. How does the application process work? 

In most cases, the potential borrower will find a loan office, who will match them with a potential investor. For owner-occupied loans, lenders will look at things such as debt-to-income ratio and credit history (although this does not matter as much compared to conventional loans). Lenders will want to see a substantial down payment in order to see commitment from the borrower, usually around 30% money down.


  1. Any loan limits?

As with FHA loans, owner-occupied loans do have limits, and largely rely on how much down payment and proof of income/savings a borrower can offer. In order to establish a reasonable limit for your home-buying process, companies such as JMJ Funding can help you through the process. With over 28 years of successful lending relationships, JMJ is your source for a smooth owner-occupied lending process.

Apply Now

Speak to an expert at (800) 559-0345