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The way you intend to use a property—primary residence, second home, or investment—affects your loan terms, pricing, and qualification requirements. Lenders view occupancy type as a risk factor.

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Occupancy Types

Primary residence — The home where you live most of the time. You must occupy within 60 days of closing and intend to live there for at least one year. Second home — A property you occupy part of the year, typically a vacation home. It must be a reasonable distance from your primary residence and cannot be a rental. Investment property — A property you purchase to rent out or generate income. You don’t intend to occupy it.

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How Occupancy Affects Terms

Occupancy TypeTypical Max LTVRate Adjustment
Primary residence90%Best rates
Second home85%+0.25% to +0.50%
Investment property80%+0.50% to +1.00%
Primary residences get the best terms because owners are less likely to default on the home they live in.

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Documentation Requirements

Lenders verify occupancy intent through:
  • Signed occupancy affidavit at closing
  • Distance from current residence (for second homes)
  • Rental history and lease agreements (for investment properties)
  • Comparison of subject property to current living situation

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Occupancy Fraud

Misrepresenting occupancy is mortgage fraud. Claiming a property is a primary residence when you intend to rent it out can result in loan acceleration, legal consequences, and future lending restrictions. If your plans change after closing (job relocation, family circumstances), lenders generally understand—but the original intent must be truthful.

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Investment Property Considerations

Bank statement loans are popular for investment properties because:
  • Rental income can supplement qualifying income with some lenders
  • Self-employed investors often have complex tax situations
  • Higher loan amounts are available than with conventional investment property loans
Expect stricter requirements: higher down payment, lower maximum DTI, and more reserves required.