The Veridian Blog

If you purchase a home with the intent of moving into it as your principal residence after some extensive remodeling, can you still apply for a principal residence loan?

Absolutely not.  Even in the “loose-lending” years, principal residence declarants were required to move into the subject property within 60 to 90 days.  Today, occupancy affidavits and lender audits (yes, they actually check to see if you live there) prevail so that if applicants apply for a principal residence loan there are no two ways about it.  In addition, the borrowers may also have to sign letters of explanation regarding the move, and change in employment, ability to work from home and commute time. 

As an alternative strategy, it may be possible to characterize the subject property as a second home, thereby receiving the same rate sheet benefits as do principal residence subject properties, but the subject property will most likely have to be located in a vacation or resort area. 

If not, then the only other occupancy choice is non-owner occupied (investment) property which yields an interest rate 0.25% to1.00% higher.  That may be the only solution at least until they ultimately decide to actually move into the subject property – at which time they can explore options to refinance their principal residence.  There is no time or seasoning requirement typical of a principal residence occupancy characterization.