Owner-Occupancy

Owner-occupancy describes a home lived in by the person who owns it, as opposed to a property rented to tenants. DSCR loans are made for investment property only. The borrower generally cannot live in the home, and lenders often ask for a signed statement saying so.

The reason is regulatory. A loan on a home the borrower lives in is a consumer mortgage, subject to ability-to-repay rules that require verifying income. DSCR loans are business-purpose loans secured by rental property, which is what lets the lender qualify on rent instead of a pay stub.

Claiming a property is a rental while planning to move in is occupancy fraud. Buyers who want to live in one unit of a duplex or fourplex usually need an owner-occupied loan program, even though the rent from the other units helps them qualify.

Further reading: Owner-Occupancy on Wikipedia.