What is the maximum number of units allowed in residential mortgage financing?

In residential mortgage financing, the maximum number of units allowed is four. This is significant because properties with one to four units are classified as residential properties, which are eligible for conventional financing, FHA, VA, and other forms of government-backed loans. This classification affects not only loan eligibility but also the types of financing options available to borrowers.

Once a property exceeds four units—meaning it has five or more—it is classified as a commercial property. Commercial properties fall under different financing criteria and typically require a different loan structure and underwriting process. Thus, understanding this distinction is crucial for mortgage loan officers and borrowers alike, as it influences the financing options and terms available for those looking to invest in residential real estate.