Owner-occupied real estate loans and business purpose real estate loans are two types of loans used for different purposes in the real estate market:

1. Owner-Occupied Real Estate Loans:

• • These loans are used to finance properties that are intended for the owner’s personal or business use.
  • The primary purpose of these loans is to purchase real estate where the borrower’s business operates or intends to operate.
  • Examples include loans for buying office space, retail storefronts, manufacturing facilities, or any other property where the borrower’s business will be located.
  • Typically, these loans offer more favorable terms and interest rates compared to loans for investment properties because lenders perceive lower risk when the borrower occupies the property.
  • Usually when getting a loan for an Owner Occupied Property only Licensed Mortgage Loan Originators and Institutions can provide these loans.
  • In some states DSCR / Rental Loans are treated as Owner Occupied Loans where you need to utilize an MLO.

2. Business Purpose Real Estate Loans:

• • These loans are used for real estate transactions that are strictly for business purposes, such as investment properties or commercial ventures.
  • The properties financed by these loans are not intended for the borrower’s personal or business occupancy but rather for generating income through rental or resale.
  • Examples include loans for buying rental properties, apartment buildings, shopping centers, or any real estate investment where the borrower’s primary objective is profit.
  • These loans may have different qualification criteria and terms compared to owner-occupied loans. They might have higher interest rates and stricter requirements because the lender assumes greater risk due to the absence of owner occupancy.
  • Business Purpose loans also include Fix and Flips, Ground Up Construction, DSCR in some states, and Multi-Units.

In summary, the main difference lies in the purpose of the real estate acquisition. Owner-occupied loans are for properties where the borrower’s will reside in including vacation homes.  Business purpose loans are for investment properties that will generate income or profit, such as Rental Properties, Fix and Flips, Ground-Up Construction.

National Lending Pro is a Business Purpose Non-Owner Occupied Private Lender and we know that having the right lending partner is important.  Connect with NLP today and make sure you are working with a Certified National Lending Pro! Click Here to find out more.