Owner-Occupant

What is 'Owner-Occupant'

An owner-occupant is a resident of a property who also holds the title to that property. In contrast, an absentee owner holds title to the property but does not live there. An absentee landlord is a type of absentee owner.

BREAKING DOWN 'Owner-Occupant'

When applying for a mortgage or refinance, the lender will need to know if the borrower is going to be an owner occupant or an absentee owner. The application will usually state, "The borrower intends to occupy the property as his/her primary residence," (or some variation thereof) when the borrower will be an owner-occupant. Some types of loans may only be available to owner-occupants and not to investors.

Owner-Occupant Property

Generally, for a property to be owner-occupied, the owner must move into the residence within 60 days of closing and live there for at least one year. Buyers purchasing property in the name of a trust, as a vacation or part-time home or for a child or relative do not qualify. Lenders may offer special programs to buyers who intend to live in a property rather than renovate and sell it or lease it. For proof, such a buyer must sign an Owner-Occupant Certification document. The Owner-Occupant Certification form, also known as HUD-9548D, can be found on the U.S. Department of Housing and Urban Development's website. It must be signed by the property's buyer and real estate agent and filed with the sale contract. Submission of a false Owner-Occupant Certification on a property risks hefty fines of up to $250,000 or imprisonment of up to two years.

Homeowners usually are not required to notify their lender that they are moving out of an owner-occupied house if they lived in it for at least 12 months. The intent when applying for and receiving the loan is important. If a buyer states plans to live in a home while knowing they intend to rent it, that is considered occupancy fraud. However, there is some flexibility in lending guidelines for borrowers who intend to live in the home but need to move out within 12 months of the loan start date. Loan documents may specify minimum residency for some programs. For example, the Department of Housing and Urban Development offers a 50 percent discount on HUD-owned homes to firefighters, law enforcement, teachers and emergency responders. The Good Neighbor Next Door Program encourages these professionals to move into revitalization areas. The discount is tied to a three-year owner-occupancy requirement. Borrowers that move out before the period ends would owe HUD a prorated portion of the discount.