Under FHA 203B, which occupancy condition applies to the borrower?

• A. The borrower may occupy or not occupy the unit
• B. The borrower must occupy the property
• C. The borrower must rent the property to others
• D. The borrower must invest in additional units

Answer: (B)

The main idea is that FHA 203B loans are made for owner-occupied homes. The borrower is required to occupy the property as their primary residence, usually within a reasonable time after closing. This occupancy rule is what distinguishes this loan from funds used for investment properties, rentals, or purely speculative purchases. Because the loan is intended to help someone live in the home they’re financing, the borrower must live there as their primary residence rather than rent it out or hold it as an investment.

That’s why the option stating the borrower must occupy the property is the best choice. The other options would describe scenarios—not occupying, renting to others, or investing in additional units—that don’t align with FHA 203B’s owner-occupancy requirement.