Owner occupied loan questiosn

[Troy Cosentino]

Hello!

I am in the process of evaluating different financing options and am having trouble understanding the rules for owner occupied loans. I plan on buying a buy-and-hold single family rental that will need some work, optimally a basement that needs finishing. The home will be my first home purchase, so I have been looking into some of the options or benefits for first time homebuyers. A local credit union offers a rebate covering 2% of a down payment which would allow me to get in for 1% with the stipulation that the "property be your primary residence with the intention of staying in the property for three years or more".

My question is, given this type of requirement what options would I (legally) have here and what qualifies as a primary residence? Could I sublet 5 of the 6 bedrooms and then rent a secondary apartment to live in myself? Is it more about my physical presence or my financial priority?

With a standard owner occupied mortgage I know 12 months is the requirement and have been comparing the trade off of having a lower down payment but holding the property for a year before being able to rent it. For the monthly carrying costs I am accounting for PITI and any PMI I'd be carrying. What else do I need to be thinking about in that (for example) 9 month gap?

Thank you for any tips!