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Living in Your 5-Plus Unit Building: How Occupancy Works
Many investors dream of owning an apartment building and living in one of the units. The rent from the other tenants helps cover the cost of the building, and you are on site to manage it. With the right size of property, that plan can be possible. The rules depend on the unit count, the state and the share of the building you occupy.
This guide covers how the lender approaches it. It is general information, not legal or tax advice. Program terms are offered only to qualified borrowers and subject to change.
Why 5 Units Is the Turning Point
Properties with one to four units are investment-only. That means you cannot use a loan from this lender to buy a small building for your own home. Once a building reaches five units, the picture changes. The lender states that at 5 or more units, most states allow owner occupancy up to 50% of livable square footage.
So the number five matters. A fourplex is for investment. A five-unit building can be a mix of your living space and rental income. If you want a refresher on the smaller case, occupancy rules page covering owner use by building size lays out both sides.
What 50% of Livable Square Footage Means
The limit is measured by space, not by the number of doors. This is a common point of confusion. A building might have six apartments, but the relevant question is how much of the total livable area you would use yourself.
Here is a simple example. Say a building has 10,000 square feet of livable space. Under a 50% cap, the borrower's own space could be up to 5,000 square feet. In a real deal, google.com the figure comes from measured floor plans and the appraisal, not from a guess. Numbers in this example are only for illustration.
Why square footage and not unit count
Units come in different sizes. One person might want a large unit that takes up a big share of the building. Another might take a studio. Measuring by square footage keeps the focus on how much of the property is owner-occupied compared with how much produces rent.
Check Your State First
The phrase "most states" is important. The lender states that it lends in 43 states, and the occupancy rule is not identical everywhere. New Jersey is the best-known example because it requires six or more units. We cover that in a separate article on the New Jersey six-unit rule.
Before you write an offer, confirm three things.
- The unit count of the building.
- The state rule that applies.
- The space you would occupy compared with the total.
Which Programs Fit a Larger Building
Five-plus unit buildings usually point to multifamily financing. The program page lists multifamily bridge loans for 5 to 350 doors and occupancy planning at $1M to $15M. It lists 80% of purchase and 100% of repairs, with 12 to 36 months interest-only. Non-recourse options are listed, and the borrower profile mentions FICO 650+. The lender states that closings can happen in as little as 20 business days. All of these are offered only to qualified borrowers and subject to change.
Smaller multifamily buildings in the 5 to 9 unit range may also fit the rental program. The rental loans for long-term income when occupancy is limited page lists up to 80% LTV and 30-year fixed or ARM options. The page notes that property types vary by program, so confirm which one fits your building.
Think Like an Underwriter
The lender says underwriting is based on cash, equity and experience. Credit is a factor, not the deciding one. For a building where you plan to live, a few details usually come up.
Property income
Run your own numbers first with the calculators for testing square footage and rent assumptions. The units you do not occupy produce rent. The more stable that rent, the easier it is to explain the plan. Lenders commonly review the rent roll and leases. If your own unit would otherwise earn rent, that can matter to how the numbers are viewed.
Reserves and track record
Reserves show you can cover vacancies and repairs. A track record shows you have managed buildings before. If you are new to larger properties, say so. A first-time owner can still be considered, but expect the lender to look closely at the plan.
Plan the Move-In Carefully
Do not treat occupancy as a detail for closing day. Decide which unit you will take and how much of the building it represents. Get the floor plans in order. If the building is mixed-use, the commercial space counts as well, and you can read more about that in our piece on running a business from a financed space.
Also think about timing. If the building is vacant or in rough shape, you may not live there right away. Tell your lending contact what the real move-in plan looks like. In some cases a short-term option such as bridge loans when occupancy has to wait until the building is ready may be worth asking about.
Common Questions
Can I live in a fourplex?
Not with this lender. Properties with one to four units are investment-only.
Is 50% a guarantee?
No. It is the upper limit the lender states for most states. Approval still depends on underwriting, and nothing here promises that anyone will qualify.
Next Steps
Start with the lender's 60-second survey on the homepage. It asks about the property, purpose and timeline, with no documents, fees or hard credit pull. A lending expert then returns preliminary terms within one business day. You can learn more about Kings of Capital and its occupancy guidelines for investors or book a call to discuss occupancy in your own multifamily building. For a specific question, contact the lender about owner-occupied space in a larger property.
Consult your CPA or attorney about how living in an investment property affects your taxes and legal position. Terms are offered only to qualified borrowers and subject to change.