owner occupied properties

Owner Occupied Properties

Why is it that Hard Money Lenders don’t want to provide loans for residential properties that are owner occupied.

  • Are lending requirements stricter on owner occupied loans?
    Due to predatory lending laws, requirements for loans on owner occupied 1-4 family dwellings are indeed stricter. Unfortunately, these laws are bit obscure, so there is no defined interest rate that is considered predatory. In essence, the laws are in place to protect consumers from ending up with loans they simply cannot pay. In reality, this leads to a lot of gray areas that private lenders do their best to avoid.


  • What if the loan request on an owner occupied property were specifically intended for business purposes?
    Unfortunately, the way the predatory lending laws are written don’t allow for this either. However, if the borrower owns a commercial or residential investment property that is owned by an entity (Corp., LLC, etc.) lenders are able to mortgage that property and cross collateralize the loan with a personal home. That would be viewed as a strictly business transaction.


  • Are there exceptions, where you would offer a hard money loan on an owner occupied property?
    As answered above, a cross collateralization can work. Also, if the property has 5 or more units, it would be considered a commercial property and not subject to predatory lending laws even if the owner occupies one of the units.

For more information on hard money loans and how H&O Capital Funding may be able to help you with your current commercial real estate needs, contact one of our lending experts.


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