From the lender's perspective, the only thing that matters is if you intend to physically occupy in the property being financed. Mortgages are either classified as owner occupied -- when you live in the property -- or non-owner occupied -- when you do not live in the property -- at the time you apply for the loan. In fact, you are required to indicate the property occupancy on your loan application.
In your case, as long as you plan reside in your new home, you should have no issue qualifying for an owner occupied mortgage. This guideline applies even though you intend to remain on the mortgage for your old property. It is helpful that you plan to rent out that property because it confirms that you will not live in it.
One point we should highlight if you recently bought your home or refinanced your mortgage is that you are usually required to occupy a property for at least a year before you can qualify for a new owner occupied mortgage on a different property. An exception may be made if you move to a new city due to a job transfer, but lenders do not want you to use an owner occupied loan to buy a property and then move out and rent the property soon after your loan closes.
Lenders apply this guideline because loan terms and qualification guidelines for owner occupied mortgages are more favorable than for non-owner occupied loans. Lenders want to prevent applicants from taking advantage of the better financing to buy rental properties that they never intended to live in. Additionally, certain loan programs do not permit investment properties.
This does not mean that your occupancy status can change after your mortgage closes. Returning to your original question, many people buy homes using an owner occupied mortgage, live in the property for several years and then move out and rent the property. If these people apply for a new mortgage to buy another home to live in, the loan is classified as an owner occupied loan on a primary residence because they have already occupied their current property for more than a year.
Finally, please note that it is also possible to obtain an owner occupied mortgage on a second or vacation home so you can qualify for multiple owner occupied loans, although the interest rate is typically higher for loans on second or vacation homes.
The table below shows mortgage terms for leading lenders near you. We recommend that you contact multiple lenders to confirm their qualification guidelines. Shopping lenders is also the best way to save money on your loan.
"B2-1.1-01, Occupancy Types." Selling Guide: Fannie Mae Single Family. Fannie Mae, May 1 2019. Web.« Return to Q&A Home About the author