So, what’s a single-family home? You may be surprised by the variety of answers you get. Talk to a real estate agent, and you’ll get one answer. Talk to a mortgage lender, and depending on the loan you want, you might get a totally different answer.
A single-family home in a big city may be different from a single-family home in the ‘burbs. Even the U.S. Census Bureau has weighed in on what exactly a single-family home is.
Single-family homes come in a variety of types and architectural styles, ranging from traditional suburban ranch homes to tiny homes. But what defines a single-family home isn’t its style, it’s the substance of the space and who owns it.
What Makes a Home a Single-Family Home?
Technically speaking, a single-family home (or single-family dwelling) is a dwelling unit in a residential zoning district that is large enough to house one family and is owned by one owner.
Other requirements for a single-family home may include:
- Owned property: You own the land the home is built on.
- Independent entrance and exit: The home has an entrance with direct access to the street. That means no shared lobby or stairways, like a condo or apartment building.
- Independent utilities and amenities: Single-family homes don’t share utilities (think: electricity, water and heating and cooling) with any other properties. A single-family home must also have a working kitchen and at least one bathroom.
Some definitions insist that a single-family home must be a detached home. That means the home is a stand-alone property and doesn’t share walls or a roof with any other homes.
But, if you live in a city like Boston, Philadelphia or San Francisco, the U.S. Census Bureau will consider a semi-attached building, like a townhome, twin or rowhome, a single-family home.
What Is a Multifamily Home?
A multifamily home is any property that contains more than one housing unit or a collection of homes with different owners. Examples of multifamily homes include apartments, condominiums, duplexes, triplexes, fourplexes and multifamily conversions.
An apartment complex may have a single owner, but its individual units are rented out. The owner collects the rent and usually covers part or all of the utilities and is responsible for building maintenance and upkeep.
A condo complex can be a home with multiple apartment units in one building or a cluster of semi-attached homes or even detached homes. The key issue is ownership.
In a condo community, a condo owner owns the interior of their home and any common spaces, like the rec room, storage areas and hallways. Condo owners also share in the ownership of the property and are bound by the community’s rules and regulations.
Condo owners pay a monthly fee for the maintenance and management of the property.
Duplex, Triplex or Fourplex
These types of homes are single buildings with 2, 3 or 4 units that are either stacked top to bottom or placed side by side. These homes may be separate residences with their own entrances, utilities and amenities, but the property is still considered a multifamily home because there is one owner.
The owner can choose to live in one of the units or rent out all the units and live somewhere else.
As the housing market gets more and more competitive, some homeowners are converting older single-family homes into multifamily homes. Usually, this involves renovating a property with 2,000-plus square feet of living space into multiple units.
To qualify as a multifamily property, each unit needs to have its own dedicated entrance, at least one bedroom, an individual kitchen and bathroom and control over the utilities.
What Are the Benefits of a Single-Family Home?
Single-family homes come with lots of pros.
- Privacy: Want more peace and quiet? A single-family home is likely to provide more quiet and more privacy than an apartment or multifamily home.
- Make some noise: If you like to throw big parties, you can throw them without clearing anything with a condo board or landlord. However, on a scale of one to downright neighborly, you should avoid violating local noise ordinances. Give your neighbors a heads up, or better yet, extend a few invites.
- Space for living: Single-family homes tend to have more storage space and living space than multifamily homes.
- Choose your look: In the mood to paint your home purple? Maybe you want to cut down that elm tree and swap it with a basketball hoop? With a single-family home, you can change the exterior and landscaping to your heart’s content – as long as your heart’s content follows local zoning ordinances.
If your single-family home is part of a homeowners association, you’ll have to follow their rules and may need to ask for their permission before you make changes to the home.
What Are the Challenges of a Single-Family Home?
Of course, a single-family home does come with its challenges.
- Cost: You’ll get more space, but that extra space will come at a cost. That usually means a larger mortgage loan.
- Maintenance: If you live in an apartment or condo complex, you may be able to call your landlord or a maintenance company when you need something fixed. But, when you own a single-family home, you’re on the hook for all maintenance and repairs. You’ll have to take care of the property inside and out.
- Financial management: With an apartment complex or in a condo community, there’s usually a property management company or owner who handles property taxes or other financial issues with the city or county. These expenses are included with your rent. As a single-family homeowner, you’ll have to budget for taxes and fees.
- Legal liability: If someone sues a building you live in, you won’t have to hire a lawyer. A landlord or property manager will take care of any legal issues. When you own a single-family home, you’re responsible for everything, and you’ll need to hire your own lawyer.
Why Does It Matter if It’s a Single-Family Home?
You may be wondering what the difference is between owning a single-family home and owning or partially owning a multifamily home. The key difference is that single-family homes may be eligible for certain types of mortgages or may have lending limits that multifamily homes don’t.
Depending on whether the loan is a conventional mortgage or a government-backed mortgage, like a Federal Housing Administration (FHA) loan, a U.S. Department of Veterans Affairs (VA) loan or a U.S. Department of Agriculture (USDA) loan, there will be other factors to take under consideration.
One of the first questions a lender will ask when you’re taking out a mortgage loan is whether the house is a single-family or multiunit home.
- Minimum down payment: For a single-unit, single-family home, you may qualify for loans that require a 97% loan-to-value (LTV) ratio. That means you only need to make a 3% down payment on the home to qualify. If the property has 2 units, you’ll need an 85% LTV (15% down). If the loan is for a 3- or 4-unit property, you’ll need a 75% LTV (25% down).
- Credit score: While you can get a mortgage to buy a single-unit, single-family home with a 620 credit score, depending on the size of your down payment, you may need a credit score of 640 or higher to buy a single-family 2- to 4-unit home.
- How much you can borrow: Conventional loans for single-family homes have fixed lending limits, which means you can only borrow up to a certain amount. As of 2021, the limits for single-family homes are between $647,200 – $970,800, depending on where the property is located.
Because conventional loans are the most common home loans in the mortgage industry, in most cases, you can use a conventional loan to buy a single-family home. This includes detached homes and semi-attached homes as well as condo units, co-ops and manufactured housing. You may also be able to purchase multifamily properties of up to 4 units.
Federal Housing Administration (FHA) loans
One interesting fact about FHA loans is that you can use them to purchase multiunit or multifamily housing of up to 4 units. You can’t use them on investment properties unless one of the units is your primary residence.
- Minimum down payment: There is a standard minimum LTV of 96.5% required with a credit score of 580 or higher (3.5% down). If your credit score is lower than 580, you need an LTV of 90% or higher (10% down). Unlike conventional loans, this doesn’t change if you buy more units.
- Type of properties you can buy: You can buy detached or semi-detached homes, manufactured housing, townhomes or row houses. You can also buy individual condo units, but they must be within an FHA-approved condominium project.
- How much you can borrow: Like conventional loans, FHA loans have lending limits. FHA loan limits range from $356,362 – $822,375. But, if you’re buying a multifamily property of up to 4 units, you could borrow as much as $1,581,750.
Veterans Affairs (VA) loans
You need to be a qualifying service member, veteran or surviving spouse to be eligible for these loans.
Like FHA loans, you can use these loans to purchase a single-family home or a property of up to 4 units, as long as you live in one of the units. There is no down payment requirement and your lending limit is based on your income.
U.S. Department of Agriculture (USDA) loans
These loans are available to anyone who is looking to buy or build a home in a qualifying rural area in the U.S.
You can only buy single-family homes with USDA loans. You can’t buy multiunit properties with these loans, even if you plan on living there.
There is no down payment requirement and there are no lending limits, but your income needs to be within 115% of the area’s median household income to qualify.
Is a Single-Family Home Right for You?
Whether a single-family home is right for you will depend on what you’re looking for in a home, how much you want to share with your neighbors and how comfortable you’ll feel managing your own property.
Once you’ve got that figured out, look for the right mortgage loan to help you buy the home of your dreams.
U.S. Census Bureau. “Subject Definitions and Table Index.” Retrieved November 2021 from https://www2.census.gov/programs-surveys/ahs/2019/2019%20AHS%20Definitions.pdf
Fannie Mae. “ELIGIBILITY MATRIX.” Retrieved November 2021 from https://singlefamily.fanniemae.com/media/20786/display
Federal Housing Finance Agency. “FHFA Announces Conforming Loan Limits for 2021.” Retrieved November 2021 from https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Conforming-Loan-Limits-for-2021.aspx
U.S. Department of Housing and Urban Development. “APPENDIX 1.0 – MORTGAGE INSURANCE PREMIUMS.” Retrieved November 2021 from https://www.hud.gov/sites/documents/15-01MLATCH.PDF
U.S. Department of Housing and Urban Development. “Maximum Mortgage Limits 2021.” Retrieved November 2021 from https://www.hud.gov/program_offices/housing/sfh/lender/origination/mortgage_limits
U.S. Department of Housing and Urban Development. “Handbook 4000.1, FHA Single Family Housing Policy Handbook.” Retrieved November 2021 from https://www.hud.gov/sites/dfiles/OCHCO/documents/4000.1hsgh-072021.pdf
U.S. Department of Veterans Affairs. “Purchase Loan.” Retrieved November 2021 from https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/
USDA Rural Development. “Single Family Home Loan Guarantees.” Retrieved November 2021 from https://www.rd.usda.gov/sites/default/files/fact-sheet/508_RD_FS_RHS_SFHGLP.pdf