Conventional loans · Fannie Mae B2-1.1-01Principal residence, second home or investment property: Fannie Mae's occupancy rules

Fannie Mae finances three occupancy types, each with its own maximum loan-to-value, credit score and pricing. A principal residence is the home the borrower lives in; with several borrowers, only one needs to occupy it and take title. Some buyers count as owner-occupants without living there: an active-duty service member temporarily away on military orders, a parent or legal guardian housing a disabled adult child who cannot work or qualify alone, and an adult child housing a parent who cannot work or qualify alone. A second home must be occupied by the borrower for some portion of the year, be a one-unit dwelling suitable for year-round occupancy, be under the borrower's exclusive control, not be rental property or a timeshare, and not be subject to an agreement giving a management firm control over its occupancy; if the lender finds rental income, the loan can still be a second home only if that income is not used to qualify. An investment property is owned but not occupied by the borrower. Second homes and investment properties must receive a Desktop Underwriter Approve/Eligible recommendation and carry loan-level price adjustments – one reason the occupancy stated on the application must be true.