We are doing a 12 month interest only loan which will be do on Demand at the end of the term. The borrower will be using their primary residence at collateral. Is this HMDA reportable?

By due on demand, do you mean the plan is for the loan to be paid back at maturity (or refinanced into long term financing)? What's the purpose of the loan?

The purpose is to purchase a condo. The borrower is not sure if they will refinance into long term financing or pay the loan off with cash in the bank.

You have a purchase of a dwelling secured by a dwelling. It's a purchase for HMDA IF it's not temporary financing.

If the loan officer underwrote them for the long term financing, I would vote this is the temporary phase of 2 phase financing. If the borrower pays off the temporary loan with cash, you're not wrong for calling this temporary and not reporting it. If the loan is "refinanced" into long term financing, that will be the purchase and reported.

If you report this as a purchase (short-term financing) and it is converted (refinanced) into long term financing, then it appears you over reported this temporary phase.

Try to get your loan officers to commit to one or the other. Leaving things like this up in the air for you to decipher is a recipe for failure when it comes to HMDA.