This house could be the owner's investment property.
A non-owner occupied, or investment property mortgage has different regulations and requirements for borrowers, as opposed to a primary residence mortgage. The rules and regulations vary based on lender, however some remain constant.
Significance
A non-owner occupied property poses more risk for the lender than a primary residence. A borrower is more likely to protect his investment in his home than an investment property, if he has to make a choice.
Function
Non-owner occupied mortgages allow borrowers to purchase rental property and rent it out for profit. The income derived from the rental is not included in the mortgage calculations.
Features
While non-owner occupied mortgages can be the same term as other mortgages, from 10 to 40 years, most come with a significantly higher interest rate than a primary residence mortgage.
Considerations
Most lenders require non-owner occupied mortgage clients to have six months of payment reserves in liquid assets, as well as a significant down payment of 30 percent or more.
Warning
Non-owner occupied mortgages are limited by Fannie Mae and Freddie Mac guidelines. A borrower can only have a total of four mortgages at any one time.
