When most people think of a primary residence, they assume the borrower must personally live in the home. Under Fannie Mae guidelines, however, several situations allow a property to qualify as a primary residence even when the circumstances are less traditional. This can be especially important for Michigan borrowers purchasing a home with family members, providing housing for a parent or adult child, or dealing with temporary military assignments.
Fannie Mae Recognizes Four Primary-Residence Scenarios
Multiple Borrowers – When multiple borrowers are on a mortgage, only one borrower generally needs to occupy the property as a primary residence and take title to the home. Not every borrower on the loan necessarily needs to live there.
Active-Duty Military Service Members – An active-duty military borrower may still qualify for primary-residence treatment when temporarily absent from the home because of military service, provided the applicable occupancy requirements and documentation are satisfied.
Parents Purchasing a Home for an Adult Child With a Disability – Fannie Mae provides an important exception for parents purchasing or refinancing a home for an adult child who cannot work or does not have sufficient income to qualify for the mortgage independently. Under qualifying circumstances, the parent may be treated as an owner-occupant, even though the adult child will be living in the property.
Children Providing Housing for Their Parents – The same concept can work in the other direction. If a parent cannot work or does not have enough income to qualify for a mortgage independently, an adult child purchasing or refinancing a home for the parent may be treated as an owner-occupant under Fannie Mae guidelines.
Fannie Mae vs. Freddie Mac Occupancy Guidelines
Fannie Mae provides specific exceptions and expanded definitions that can allow certain family and military situations to receive primary-residence treatment. Freddie Mac’s primary-residence requirements are structured differently and may not provide the same treatment for every scenario. That distinction can affect financing options, down-payment requirements, pricing and overall loan eligibility.
Before assuming a property cannot qualify as a primary residence, speak with our mortgage team.
