source:
  type: guide
  id: fnma-sel-b2-1.1-01
  authority: Fannie Mae Selling Guide B2-1.1-01 — Occupancy Types
  description: Fannie Mae Selling Guide B2-1.1-01 — Occupancy Types.
  coverage_tier: operative
obligations:
- id: fnma-sel-b2-1.1-01-full
  canonical_id: fnma-sel-b2-1.1-01-full
  section: Fannie Mae Selling Guide B2-1.1-01 — Occupancy Types
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B2-1.1-01 — Occupancy Types
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'B2-1.1-01, Occupancy Types (10/05/2022) Introduction This topic
      contains information on occupancy type requirements, including: Overview Principal
      Residence Properties Second Home Properties Investment Properties Deﬁning Occupancy
      for a Group Home Published May 6, 2026 158 Overview Fannie Mae purchases or
      securitizes mortgages secured by properties that are principal residences, second
      homes, or investment properties. For the maximum allowable LTV/CLTV/HCLTV ratios
      and credit score requirements for each occupancy type, see the Eligibility Matrix.
      Principal Residence Properties A principal residence is a property that the
      borrower occupies as their primary residence. The following table describes
      conditions under which Fannie Mae considers a residence to be a principal residence
      even though the borrower will not be occupying the property. Borrower Types
      Requirements for Owner Occupancy Multiple borrowers Only one borrower must occupy
      and take title to the property, except as otherwise required for mortgages that
      have guarantors or co-signers (see B2-2-04, Guarantors, Co-Signers, or Non-Occupant
      Borrowers on the Subject Transaction). Military service members A military service
      member borrower currently on active duty and temporarily absent from their principal
      residence because of military service is considered to be an owner occupant.
      Lenders must verify the borrower''s temporary absence from the subject property
      by obtaining a copy of the borrower''s military orders. The military orders
      must evidence the borrower will be absent from the subject property as of the
      date the owner occupancy must be established as required by the security instrument.
      Loans that meet these requirements must be delivered with Special Feature Code
      754. Parents or legal guardian wanting to provide housing for their handicapped
      or disabled adult child If the child is unable to work or does not have suﬃcient
      income to qualify for a mortgage on their own, the parent or legal guardian
      is considered the owner/occupant. Published May 6, 2026 159 Borrower Types Requirements
      for Owner Occupancy Children wanting to provide housing for parents If the parent
      is unable to work or does not have suﬃcient income to qualify for a mortgage
      on their own, the child is considered the owner/occupant. Second Home Properties
      The table below provides the requirements for second home properties. ✓ Second
      Home Requirements must be occupied by the borrower for some portion of the year
      is restricted to one-unit dwellings must be suitable for year-round occupancy
      the borrower must have exclusive control over the property must not be rental
      property or a timeshare arrangement 1 If the lender identiﬁes rental income
      from the property, the loan is eligible for delivery as a second home as long
      as the income is not used for qualifying purposes, and all other requirements
      for second homes are met (including the occupancy requirement above). cannot
      be subject to any agreements that give a management ﬁrm control over the occupancy
      of the property must be underwritten in DU and receive an Approve/Eligible recommendation,
      with the exception of high LTV reﬁnance loans required to be underwritten in
      accordance with the Alternative Qualiﬁcation Path (see B5-7-03, High LTV Reﬁnance
      Alternative Qualiﬁcation Path). An LLPA applies to certain loans secured by
      second homes. This LLPA is in addition to any other price adjustments that are
      otherwise applicable to the particular transaction. See the Loan-Level Price
      Adjustment (LLPA) Matrix. Investment Properties An investment property is owned
      but not occupied by the borrower. An LLPA applies to all mortgage loans Published
      May 6, 2026 160 secured by an investment property. These LLPAs are in addition
      to any other price adjustments that are otherwise applicable to the particular
      transaction. See the Loan-Level Price Adjustment (LLPA) Matrix. Loans secured
      by an investment property must be underwritten in DU and receive an Approve/Eligible
      recommendation, with the exception of high LTV reﬁnance loans that are required
      to be underwritten in accordance with the Alternative Qualiﬁcation Path (see
      B5-7-03, High LTV Reﬁnance Alternative Qualiﬁcation Path). Deﬁning Occupancy
      for a Group Home Eligibility and pricing for group homes will be the same as
      currently provided under the terms and conditions established for principal
      residence, second home, or investment properties depending on the particular
      occupancy status of the borrower(s). Investment properties that are or will
      be leased to business entities for use as a group home are eligible for purchase
      by Fannie Mae (provided all borrowers are individuals). If the lender identiﬁes
      rental income from the property, the loan is eligible for delivery as a second
      home as long as the income is not used for qualifying purposes, and all other
      requirements for second homes are met (including the occupancy requirement above).
      1 Recent Related Announcements The table below provides references to recently
      issued Announcements that are related to this topic. Announcements Issue Date
      Announcement SEL-2022-09 October 05, 2022 Announcement SEL-2022-05 June 01,
      2022 Announcements SEL-2021-11 December 15, 2021 Announcement SEL-2021-03 April
      07, 2021 Announcement SEL-2019-04 May 01, 2019 Announcement SEL-2019-02 March
      6, 2019 Published May 6, 2026 161 Section B2-1.2, LTV, CLTV, HCLTV, and Subordinate
      Financing B2-1.2-01, Loan-to-Value (LTV) Ratios (06/01/2022) Introduction This
      topic contains information on LTV ratios, including: Calculation of the LTV
      Ratio Sales Price and Appraised Value Used by DU Loan-Level Price Adjustments
      Calculation of the LTV Ratio The maximum allowable LTV ratio for a ﬁrst mortgage
      is based on a number of factors including, the representative credit score,
      the type of mortgage product, the number of dwelling units, and the occupancy
      status of the property. The following table describes the requirements for calculating
      LTV ratios for a ﬁrst mortgage transaction. The result of these calculations
      must be truncated (shortened) to two decimal places, then rounded up to the
      nearest whole percent. For example: 94.01% will be delivered as 95%, and 80.001%
      will be delivered as 80%. The rounding rules noted above also apply to the CLTV
      and HCLTV ratio calculations. Lenders'' systems must contain rounding methodology
      that results in the same or a higher LTV ratio. Underwriting Method Type of
      Transaction Calculation of the LTV Ratio 1 Manual and DU Purchase money transactions
      Divide the original loan amount by the property value. (The property value is
      the lower of the sales price or the current appraised value.) Manual and DU
      Reﬁnance transactions Divide the original loan amount by the property value.
      (The property value is the current appraised value.) Published May 6, 2026 162
      Underwriting Method Type of Transaction Calculation of the LTV Ratio 1 Manual
      and DU Co-op share loans See Calculating the LTV ratio for Co-op Share Loans
      in B4-2.3-04, Loan Eligibility for Co-op Share Loans. Manual and DU Mortgages
      with ﬁnanced mortgage insurance Divide the original loan amount plus the ﬁnanced
      mortgage insurance by the property value. (The property value is the lower of
      the sales price or the current appraised value.) Note: The LTV ratio calculations
      shown above may diﬀer for certain mortgage loans. For details on these diﬀerences,
      see B2-1.3-05, Payoﬀ of Installment Land Contract Requirements; B5-2-03, Manufactured
      Housing Underwriting Requirements; B5-3.1-02, Conversion of Construction-to-
      Permanent Financing: Single-Closing Transactions; B5-3.3-01, HomeStyle Refresh
      for Improvements on Existing Properties; B5-3.2-03, HomeStyle Renovation Mortgages:
      Collateral Considerations; B5-5.1-02, Community Seconds Loan Eligibility; B5-5.2-02,
      Loans with Resale Restrictions: Eligibility, Collateral and Delivery Requirements;
      B5-5.3-03, Shared Equity Transactions: Eligibility, Underwriting and Collateral
      Requirements; and B7-1-01, Provision of Mortgage Insurance. Refer to the Eligibility
      Matrix for maximum allowable LTV ratios. Sales Price and Appraised Value Used
      by DU DU uses information in the loan application to determine the sales price
      and appraised value it uses to calculate the LTV, CLTV, and HCLTV ratios. DU
      uses the amounts entered in the following data ﬁelds in the online loan application:
      Sales price = Line A + Line B + Line C (in Section L4) Line A = Sales Contract
      Price (the sales price for purchase transactions, or the cost of construction
      for construction transactions). Line B = Improvements, Renovations, and Repairs
      (the cost of these items for HomeStyle Renovation transactions). Line C = Land
      Value (For certain construction or manufactured home transactions the cost or
      value of the land if the borrower acquired the lot separately). Appraised value
      = Appraised Property Value (in Section 4a) Note: If the Appraised Property Value
      is not present, DU will use the Estimated Property Value. The Appraised Property
      Value must be entered (when available) and the loan caseﬁle must be resubmitted.
      Loan-Level Price Adjustments Published May 6, 2026 163 An LLPA may apply to
      certain mortgages based on the loan-to-value (LTV) ratio and representative
      credit score. These LLPAs are in addition to any other price adjustments that
      are otherwise applicable to the particular transaction. See the Loan-Level Price
      Adjustment (LLPA) Matrix . As deﬁned in the LTV ratio, the original loan amount
      is the amount of the loan as indicated by the note. 1 Recent Related Announcements
      The table below provides references to recently issued Announcements that are
      related to this topic. Announcements Issue Date Announcement SEL-2022-05 June
      01, 2022 Announcement SEL-2020-07 December 16, 2020 B2-1.2-02, Combined Loan-to-Value
      (CLTV) Ratios (12/04/2018) Introduction This topic contains information on CLTV
      ratios, including: Calculation of the CLTV Ratio Loan-Level Price Adjustments
      Calculation of the CLTV Ratio For ﬁrst mortgage loans that are subject to subordinate
      ﬁnancing, the lender must calculate the LTV ratio and the CLTV ratio. For ﬁrst
      mortgage loans that are subject to a HELOC, see B2-1.2-03, Home Equity Combined
      Loan-to-Value (HCLTV) Ratios. For all other subordinate liens, see B2-1.2-04,
      Subordinate Financing for additional information. The CLTV ratio is determined
      by dividing the sum of the items listed below by the lesser of the sales price
      or the appraised value of the property. the original loan amount of the ﬁrst
      mortgage, the drawn portion (outstanding principal balance) of a HELOC, and
      the unpaid principal balance of all closed-end subordinate ﬁnancing. (With a
      closed-end loan, a borrower draws down all funds on day one and may not make
      any payment plan changes or access any paid-down Published May 6, 2026 164 principal
      once the loan is closed.) Note: For each subordinate liability, in order for
      the lender to accurately calculate the CLTV ratio for eligibility and underwriting
      purposes, the lender must determine the drawn portion of all HELOCs, if applicable,
      and the unpaid principal balance for all closed-end subordinate ﬁnancing. If
      any subordinate ﬁnancing is not shown on a credit report, the lender must obtain
      documentation from the borrower or creditor. If the borrower discloses, or the
      lender discovers, new (or increased) subordinate ﬁnancing after the underwriting
      decision has been made, up to and concurrent with closing, the lender must re-underwrite
      the mortgage loan. (See B3-6-02, Debt-to-Income Ratios, for additional information.)
      Note: The CLTV ratio calculation may diﬀer for certain mortgage loans. For details
      on these diﬀerences, see B2-1.3-05, Payoﬀ of Installment Land Contract Requirements;
      B5-2-03, Manufactured Housing Underwriting Requirements; B5-3.1-02, Conversion
      of Construction-to-Permanent Financing: Single-Closing Transactions; B5-3.2-03,
      HomeStyle Renovation Mortgages: Collateral Considerations; B5-3.3-01, HomeStyle
      Refresh for Improvements on Existing Properties; B5-5.1-02, Community Seconds
      Loan Eligibility; and B5-5.2-02, Loans with Resale Restrictions: Eligibility,
      Collateral and Delivery Requirements; and B5-5.3-03, Shared Equity Transactions:
      Eligibility, Underwriting and Collateral Requirements. Refer to the Eligibility
      Matrix for allowable CLTV ratios. Loan-Level Price Adjustments An LLPA applies
      to certain mortgages with subordinate ﬁnancing. These LLPAs are in addition
      to any other price adjustments that are otherwise applicable to the particular
      transaction. See the Loan-Level Price Adjustment (LLPA) Matrix. Recent Related
      Announcements There are no recently issued Announcements related to this topic.
      B2-1.2-03, Home Equity Combined Loan-to-Value (HCLTV) Ratios (02/23/2016) Introduction
      This topic contains information on HCLTV ratios, including: Calculation of the
      HCLTV Ratio Permanently Modiﬁed HELOCs Published May 6, 2026 165 Calculation
      of the HCLTV Ratio For ﬁrst mortgages that have subordinate ﬁnancing under a
      HELOC, the lender must calculate the HCLTV ratio. This is determined by dividing
      the sum of the items listed below by the lesser of the sales price or appraised
      value of the property. the original loan amount of the ﬁrst mortgage, the full
      amount of any HELOCs (whether or not funds have been drawn), and the unpaid
      principal balance (UPB) of all closed-end subordinate ﬁnancing. Note: For each
      subordinate liability, in order for the lender to accurately calculate the HCLTV
      ratio for eligibility and underwriting purposes, the lender must determine the
      maximum credit line for all HELOCs, if applicable, and the unpaid principal
      balance for all closed-end subordinate ﬁnancing. If any subordinate ﬁnancing
      is not shown on a credit report, the lender must obtain documentation from the
      borrower or creditor. If the borrower discloses, or the lender discovers, new
      (or increased) subordinate ﬁnancing after the underwriting decision has been
      made, up to and concurrent with closing, the lender must re- underwrite the
      mortgage loan. (See B3-6-02, Debt-to-Income Ratios, for additional information.)
      Permanently Modiﬁed HELOCs If the lender determines the HELOC has been permanently
      modiﬁed and the outstanding UPB is less than the permanently modiﬁed HELOC,
      the lender must use the modiﬁed HELOC amount in calculating the HCLTV ratio
      for eligibility purposes and for delivery. The lender must obtain appropriate
      documentation that the HELOC has been permanently modiﬁed and include this documentation
      in the loan ﬁle. If the outstanding UPB is greater than the permanently modiﬁed
      HELOC, the lender must use the outstanding UPB to calculate the HCLTV ratio
      for eligibility purposes and for delivery. As noted above, the lender must obtain
      appropriate documentation and include that documentation in the loan ﬁle. In
      no case may the CLTV ratio exceed the HCLTV ratio. Note: The HCLTV ratio calculation
      may diﬀer for certain mortgage loans. For details on these diﬀerences, see B2-1.3-05,
      Payoﬀ of Installment Land Contract Requirements; B5-2-03, Manufactured Housing
      Underwriting Requirements; B5-3.1-02, Conversion of Construction-to-Permanent
      Financing: Single-Closing Transactions; B5-3.3-01, HomeStyle Refresh for Improvements
      on Existing Properties; B5-3.2-03, HomeStyle Renovation Mortgages: Collateral
      Considerations; and B5-5.1-02, Community Seconds Loan Eligibility. Note: Refer
      to the Eligibility Matrix for maximum allowable HCLTV ratios. Recent Related
      Announcements There are no recently issued Announcements related to this topic.
      Published May 6, 2026 166'
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