X

Thinking about buying a home this spring? Check out the latest update to the income needed to buy a median-priced home in the top 50 metro areas.

Thinking about buying a home this spring? Check out the latest update to the income needed to buy a median-priced home in the top 50 metro areas.

Can my lender ask me why I'm buying a specific home?

Keith Gumbinger
Occupancy fraud
Q: The lender is asking me why I am buying a smaller house, if it is closer to my work and why I want to buy this home. The lender is even requiring a letter with the reasons before they will approve the loan. Can they do this?


A: While you don't provide nearly enough information, the short answer is "yes." For example, you don't mention if this is a primary residence or a second home; there can be different lending rules and mortgage rates for different kinds of properties. Are you retaining your existing home and buying another?

If so, both can't possibly be your primary residence, and so the rules which govern your purchase would likely apply to second home (or even investment property) mortgages.

Lenders are rightfully concerned about fraud, and certain kinds of fraud (such as occupancy fraud) are far more prevalent than you might think. That's why your lender might ask you questions about your intentions, especially if they are outside the norm, such as moving farther away from work, or buying a smaller home when you already have a larger one. Trying to assess your intentions allows them to apply the proper set of rules for your transaction, helping to protect them in the event that you should fail to make payments on your loan.

Ask the expert
Keith Gumbinger
Keith Gumbinger
Mortgage Expert
Vice President, HSH.com
About Keith: Mortgage market observer and analyst with 35 years experience... (more)
Please enter a question.
Please enter name.
Please enter email.
Captcha code invalid
Q: How do I find out who owns my mortgage?
FEB 20, 2024
A:

The owner of the loan is most often the "investor" -- the entity who put up the actual funds to make your mortgage happen.

Read More
Q: What loan amount does a mortgage need to be for it to be considered a Jumbo Loan?
NOV 28, 2023
A:

This question used to have a simple answer, since there was a "bright line" definition -- the conforming loan limit....

Read More
Q: What does the term ‘conforming’ mean?
SEP 21, 2023
A:

Simply put, a "conforming" mortgage "conforms" to a set of standards so that the loan can be eligible to be sold to Fannie Mae or Freddie Mac.

Read More
Add to Homescreen?
X
X
Install this web app on your phone :tap and then Add to homescreen