The owner who actually resides in the property is the owner-occupant. If both live in the property, they are both owner-occupants.
Ownership is only part of the definition of occupancy, actual occupancy matters, too. In the course of processing a mortgage application, the documents provided will confirm this occupancy status. Tax returns, pay stubs, copies of utility bills, bank statements and other supporting documents will show the borrowers' names and their addresses.
Occupancy is a key factor in making a credit decision. A property that is the primary residence of a borrower is the less risky of the other occupancy scenarios; second home and investment property. Less risk typically carries a lower interest rate and if the lender is offering a lesser rate, then the lender wants to be certain of the occupancy.