The full explanation
Lenders tell it apart from a second home, which you occupy in addition to your principal residence but for less than most of the year, and from an investment property, which you own but do not live in. Fannie Mae buys loans on all three, but it applies a loan-level price adjustment (LLPA) to loans on investment properties.
An example
Julio buys a duplex, lives in one unit all year and rents out the other. For the lender, the unit he lives in is his principal residence.
You will see it in…
- Your mortgage application, where you say how you will use the home
- The lender's rules for second homes and investment properties
- Property tax exemptions for your main home
