Here are the main types of residential property that are accepted within the mortgage industry to finance. The ‘type’ is a factor in the loan process and can impact the interest rate, loan-to-value requirements, appraisal type and other Underwriting guideline requirements which can vary from lender to lender and between the types of financing options (i.e. Conventional, FHA, VA, etc.). So it is important to determine the property type up front.
Single Family Residence (aka SFR)
A single family home is what we think of as a standard house. It has its own foundation and was designed and built for one family to occupy. It is a one-unit dwelling structure with open space on all sides. It is separate from other dwellings with walls that are extended from the foundation to the roof.
These are considered multi-family properties. A Duplex has two living units, a Triplex has three and a Fourplex has four. The property must be zoned multi-family, and everything permitted through the city properly. These are two, three or four family dwellings that are generally attached to one another and share the same tax parcel therefore will be owned as one property.
Condominium (aka Condo)
A condominium is a building or complex of buildings containing a number of individually owned units. There is a system of ownership by which Condos operate in which owners have full title to their individual unit and an undivided interest in the shared parts of the entire property.
A condo has shared exterior walls, walkways, sometimes hallways, grounds, roadways, parking, and other amenities. The property is real estate that is owned by all of the owners. A Homeowner’s Association will be established that is managed by the owners. The HOA may elect to have a Property Management Company manage the collection and disbursement of HOA Dues and other matters so that it is done on a professional, business-like manner and separate from the owners.
There are CC&Rs (Covenants, Conditions & Restrictions) that each owner must adhere to which are provided and are part of the title report and documents recorded with the County.
Some properties are obviously condominiums, and some are not. The Legal Description will be the factor to determine whether or not a property was established by the original builder/developer as a Condominium.
A townhome may be classified as a single-family residence or as a condo. The Legal Description will be the determining factor for the lender. A townhome structure is generally narrower than a standard SFR and has more than one story. They are designed to take up less real estate/property space. The square footage is planned in more of a vertical design rather than horizontal.
Planned Unit Development (aka PUD)
A Planned Unit Development can be a group of single family homes or townhomes. It is a project or subdivision with common property and improvements that are owned and maintained by an owner’s association for the benefit and use of the owners within the project.
This was designed by a developer so that a grouping of homes in a neighborhood/area that has some common grounds, perhaps an entrance and other amenities can share in the maintenance and cost. The homes can be similar in style and size and likeness to keep within a common theme. There are CC&Rs (Covenants, Conditions & Restrictions) that each owner must adhere to which are provided and are part of the title report and documents recorded with the County.
Planned Urban Development
A Planned Urban Development refers to a real estate development which integrates residential and commercial building with open space in a single project. This is an urban version of a planned development but should not be confused with a planned unit development.
A planned urban development typically originates as a partnership between a local or municipal government and developers. In recent years, urban planners have increasingly sought to recreate the mixed-use orientation within communities. These traditional settlements included housing, commerce and localized industry in a single area. Planned urban development has emerged as a response to this trend, orienting urban communities around the principles of convenience and efficiency. The idea is to have majority of what its inhabitants need all in the development.
This type of property will also have CC&Rs (Covenants, Conditions & Restrictions) that each owner must adhere to which are provided and are part of the title report and documents recorded with the County.