what is non owner occupied 
non owner occupied is a classification used in mortgage origination risk based pricing and housing statistics for one to four unit investment properties the classification means that the owner does not occupy the property the term is not typically used for multifamily rental properties such as apartment buildings understanding non owner occupiedthe accurate classification of property is important for real estate lenders to determine the interest rate that they will charge a borrower and to ensure they are adequately compensated for the risks they take in lending money for a purchase a mortgage on a non owner occupied property might have a slightly higher interest rate than a mortgage on an owner occupied property this is because borrowers of non owner occupied properties are more likely to default on their mortgages 2because of the higher interest rate some unscrupulous borrowers will try to classify a non owner occupied mortgage as an owner occupied mortgage to receive a lower interest rate and save money this is a type of mortgage fraud known as occupancy fraud occupancy fraud occurs when a borrower lies on a mortgage application regarding whether or not the property will be owner occupied if discovered the borrower could face many repercussions including prosecution for bank fraud or a demand from the lender that the entire mortgage balance be repaid immediately in some situations renting an owner occupied property may not be occupancy fraud such as when a homeowner must move elsewhere for a job to avoid unintentionally committing occupancy fraud borrowers should contact their mortgage lenders before renting owner occupied properties to tenants non owner occupied properties and the real estate marketin many cases non owner occupied properties refer to condominiums and other single family homes that are owned and rented out to others non owner occupied properties require insurance coverage before renters can use them furthermore if the property is not rented out to tenants and if it is intentionally vacant with no occupants then a different type of property insurance will be necessary buying and renting out properties for other residential occupants represents a significant part of the overall real estate market those who invest in these properties typically search for properties that need repairs but offer the possibility of attracting tenants if they are refurbished and repositioned on the market this could also apply to different types of vacation properties that are not the primary dwelling of the owner non owner occupied financingthere is a class of financing for non owner occupied properties specifically for renovation purposes a non owner occupied renovation loan is a type of mortgage that the borrower can use to not only acquire the property but also borrow funds that will go toward the renovation of the dwelling in this case the property will not be a turnkey property that the investor can purchase and immediately rent out the value of such a mortgage is typically based on the value of the property after it has been refurbished and renovated 3while there is no minimum repair work that must be done with the funds from this type of mortgage the renovations must be a permanent part of the residence this could include adding a new bathroom replacing a roof new plumbing or paving a new driveway the renovations must also increase the overall value of the property on which the mortgage was taken out cosmetic improvements that increase the appeal of the property are not enough the repairs and refurbishment must create a tangible improvement to the dwelling s market value such mortgages typically can be used by owners with up to four financed non owner occupied properties 