Types of Houses That Most Affect Mortgage Terms and Appraisal Values

Owning a home is an investment. Like any investment, a house has an opportunity to appreciate or depreciate its value over time. Any homeowner would want to see their home value appreciate over time as that helps the homeowner build equity in the home. Eventually, if the homeowner ever sold the home, that equity would be converted into dollars. There are many types of houses out there. But did you know the type of house you buy can affect the mortgage terms and the appraised value of the home?

Types of Housing: The Way Lenders See It

All houses are not created equal, especially when a bank is trying to value a home. For example, a condo will receive a different valuation when compared to a ranch style home. Lenders are willing to lend homebuyers money, but lenders always want to be sure they are lending money to a buyer to purchase a safe investment - and that means a lender will prefer to lend to a homebuyer purchasing a home with a stable value.

Want the Best Appraisal Value & Mortgage Terms? Go for a Traditional House

If you want to get the best appraised value and mortgage terms, it may be worth going for a traditional house. As the saying goes, ‘history repeats itself.’ Lenders look at something that’s tried and true as being safe, and what’s safe reduces the lender's overall risk.

The less risk a lender takes on, the more money they can pass onto the borrower. A traditional home built on a single lot of land can be the easiest type of home to get a loan for.

So Many Styles to Choose From

There are so many styles of homes to choose from. Each home comes with its own unique set of pros and cons, and each home will receive its own valuation in the eyes of the lender.

Architectural Styles

There are roughly 14 main styles of homes you can choose from.

These include:

1. Ranch Style Houses

  • These are generally one or two levels and built of brick or wood. Most ranches have a garage located on either the front left or front right side of the home. These homes are easy to build and were incredibly popular in the 1950’s, 1960’s, and 19070’s.
    • Pros
      • Ranch style homes tend to be very affordable.
      • Popular in the suburbs.
      • Ranches are often built in a community or development setting.
    • Cons
      • Expensive to add onto as the foundation will also need to be extended.
      • These homes have a cookie cutter design.

2. Classical Homes

These homes look like a box, and are perfectly symmetrical. Classical homes are typically 2-3 stories high and very popular along the east coast.
  • Pros
    • Durability! Many of these homes are built with brick, and they are built to last!
    • Classical homes tend to be more spacious.
    • These homes have numerous stories, which allows for the downstairs to be dedicated to entertainment/everyday living and the upstairs can be for the bedrooms.
  • Cons
    • Heating or cooling a numerous multiple story home is expensive and challenging.
    • Many of these homes have a classical/historical design to them. Finding the right contractor that will preserve the classical charm can be expensive.

3. Beach Houses & Bungalows

  • Beach bungalows initially originated in New England, but their design became popular on the west coast in more recent years. These homes tend to be single story living, and are built on a narrow piece of land. The house is typically more long than wide. A large front porch is common.
    • Pros
      • These homes have stayed in style since the beginning of time! Lenders love to see this as bungalows are always in demand.
      • The compact design is great for a low maintenance home.
    • Cons
      • Bungalows are typically smaller homes. Although this can be a pro considering the low maintenance, if you’re raising a family you may feel like there is not enough space.
      • Although possible, a two-story bungalow isn’t common. This keeps all living on one story, which many people dislike.

4. Modern & Contemporary Homes

  • These are known for their clean lines, use of glass, and natural material. These homes tend to use a minimalist design and will leverage a lot of natural light to brighten the home.
    • Pros
      • These homes are designed with an open floor plan, making it a modern family's dream come true.
      • This style of home is new, so most of these homes are built to be incredibly energy efficient.
    • Cons
      • Although their large windows attract a lot of natural light, they also attract the eyeballs of neighbors.
      • These homes are typically expensive. The new construction, open floor plan, and the energy efficiency of the home comes at a price!

5. Cabins & Cottages

  • Dating back to the 1700s, these smaller homes are popular in rural areas. They are known for being a single story that seldom has a garage. If a garage is present, it was typically built on the land as an addition years later.
    • Pros
      • Cabins/cottages are affordable.
      • The single story floor plan is great for those that cannot climb stairs.
      • Lot sizes tend to be small, making these homes low maintenance.
    • Cons
      • Smaller homes make everything seem like it’s right on top of each other. If you have a big family, a cabin would make everything very tight.
      • Rural homes do not appreciate as quickly as homes in an urban area. It’s difficult to find work in a rural area, which can be a turn off for many people.

6. Farmhouses

  • These beautiful homes tend to have a large front or wrap around porch, a steep pitched roof, and large open floor plan. Farm houses tend to be found on a large lot, and a detached garage is typically found on the side of the home.
    • Pros
      • As mentioned, these homes are typically found on large acreage or lot sizes (farms).
      • These homes tend to have plenty of space, in a private setting.
    • Cons
      • There could be utility challenges in the home. If your house is situated far away from the main road, getting gas, or city plumbing may be a challenge. Oftentimes a farm house will come with well water and a septic system.

7. Mediterranean & Spanish Style Homes

  • These homes are typically found in Florida, California, or Arizona. These homes come with red tile roofs, and a stone or plaster siding.
    • Pros
      • The plaster used on the home helps keep the home cool.
      • There is typically a courtyard within the property , which is a great entertainment space!
      • These homes come with a great deal of privacy.
    • Cons
      • The home is built with unique material, which often requires special treatment.
      • This style home is really only meant for warm climates. A cool/damp climate can present challenges to the home.

8. Pueblo Revival

  • In the southwest, these homes are very popular. Originating from the Native American culture, the flat roof, exposed wood beams, and mudbrick walls are easily identifiable.
    • Pros
      • The thick walls provide natural insulation.
      • The courtyard becomes the center of the home.
      • The style of these homes date back hundreds of years, but believe it or not, these homes are great for the modern lifestyle.
    • Cons
      • Similar to the Spanish style homes, these homes are really meant for warm and dry climates.
      • It’s not uncommon to have leaks with a flat roof.

9. Victorians

  • These homes are typically built on a small piece of land, and often right up against another Victorian home. Because these homes are built on tight pieces of land, it forced the builders to build upwards to create space. Victorian homes are found throughout the country, but most common on the east and west coast.
    • Pros
      • For those that love numerous level living, Victorian homes are a great choice.
      • Victorian homes are built in vibrant areas, right outside the city in many instances. If you want to own a home, but live in a highly populated area, you’ll likely find a Victorian home that's suited for you.
    • Cons
      • These homes are often found in historical districts. Although that can boost the value of your home, it also makes it very expensive to repair.
      • Many Victorian homes were built on a very thin foundation. Depending on the age of the home, it may be time to repair/replace that old foundation.

10. Art Deco

  • The stucco walls, round corners, and use of glass give this home truly unique characteristics. These home styles are rare, but are more popular in California and Florida.
    • Pros
      • These homes are found in vibrant cities. If you want to live within walking distance of downtown, you may find yourself in an art deco home.
    • Cons
      • Quite opposite to the pro of these homes, if you need space/privacy, this style home is not for you.

11. Greek Revival Homes

  • The exterior of the home has numerous columns supporting the home. Oftentimes, there will be a bi-level porch that wraps around the entire home. These homes are known for their gable roof with numerous roof lines.
    • Pros
      • These homes are spacious with high ceilings!
      • The large open space of the home is greater for entertaining guests.
      • These homes are usually situated on a private piece of land.
    • Cons
      • The size of the home can present some challenges. Maintaining the home and grounds is time consuming and expensive.

12. Italianates

  • A cousin to a Victorian home, these 2-3 story homes are typically found in historic districts. In the North East these homes are made of brick, stone or stucco whereas on the west coast these homes will have a wood siding finish.
    • Pros
      • These homes have a classic, timeless design to them.
      • These homes are situated in vibrant areas. It’s common to find these homes near a University or within a city.
    • Cons
      • Maintaining/repairing these homes can be expensive!
      • Italianate homes are typically built connected to another Italianate home. If you want a large backyard, or private space, you won't find that with this style of home.

13. Townhouses

  • These tall and narrow homes are often connected or found in a row of other townhouses. These homes typically have 2 stories. Sometimes the garage is put underneath the first floor. These homes are found within the city and are typically constructed to fit numerous homes on a single plot of land.
    • Pros
      • The property is often maintained by an association, which makes a townhouse a great home to live in if you don’t want to do maintenance.
      • On a price per square foot standpoint, these homes typically cost less than a single family home on a private piece of land.
    • Cons
      • Some HOA fees can be expensive.
      • Townhouses do not provide a great deal of privacy.
      • The yards are very small for each townhome. If you have kids, or dogs, you may want to consider not moving to a townhouse.

14. Country Style Homes

These are very similar to the farmhouse. As the name suggests, these homes are found in the countryside, often situated on a beautiful piece of private land. The modern country home will likely come with a 2-3 car garage, a large porch, and will be two stories.

    • Pros
      • The open floor plan and vast indoor/outdoor space make these homes a perfect choice for raising a family.
      • These homes are private! There is often a large front yard separating the home from the main street.
    • Cons
      • If you’re living in the country, city plumbing may not be an option.Your home may be heated by propane, and your water may come from the well.
      • Economic conditions may be tough in the country. You may travel a greater distance to work.

All in all, when a highly desired house comes to the market, it is worth more to the buyer and the lender. There are situations where a beautiful home comes to the market, but its uniqueness makes it difficult to sell.

Unique Homes

Despite how beautiful a uniquely designed home is, they often present challenges selling. Not only do unique homes attract a very specific buyer, a lender also needs to believe in the home! A unique home is challenging to appraise properly. For some, they’ll pay a premium for a unique home. For others, they may be turned off by the location, design, or building materials.

For example, a circle or octagonal home may be beautifully designed, but how can you properly compare that home's price to another similar home? To get a true valuation, a lender will want to compare the style home to other similar styled homes in the area to determine the fair market price. If the home is so unique for the area, a lender may not feel comfortable appraising the home properly.

Old Foundations

One of the most common things that holds up the mortgage process is when a homebuyer is looking to buy a home, but the home happens to be built on an old foundation. If the foundation is old, unstable, or breaking/cracking, a mortgage company will not be comfortable financing that home. Foundational problems can ruin a home if not acted on. Fixing a foundation can be very expensive as well!

Modular & Mobile Homes: Appraisals and Mortgage Terms

A modular home is a home that is built in a factory setting, section by section. The numerous sections will be delivered to the jobsite and assembled into one final unit.

A mobile home is a prefabricated structure that is built within a factory. These homes are attached to a metal frame, or chassis, and transported to the final site or piece of land.

Once the modular home is fully assembled, the home is treated the same way any typical site-built home would be treated. These homes are considered permanent, as they cannot be towed away and do not sit on a chassis. Whereas a mobile home can present financing challenges because technically a mobile home is not permanent. These homes can be moved to another piece of land with ease.

Oftentimes, a mobile home sits on rented land. Many mobile parks are owned by an investor, who rents out the numerous homes to tenants. Lenders are happy to lend money to a home that is situated on a permanent fixture, or piece of land, and a mobile home does not fit that requirement.

Value and Terms for Condos

Condos are becoming increasingly more popular, but getting financing for a condo is more challenging for a variety of reasons.The most common challenges come from the fact that:

  1. Condos are less popular and harder to sell when compared against a single family home. Remember, a bank wants to lend money to someone purchasing something that is tried and true. Condos are now just starting to gain popularity.
  2. Condos come with HOA fees, which can be expensive! These HOA fees will reduce how much money you're able to finance.
  3. Oftentimes, a condo is located in a mixed use space. You may see a condo complex situated above commercial space. By and large, banks are not particularly fond of financing a condo situated within one of these mixed use spaces.

Why Condos Typically Appraise for Less than Houses

Additionally, a condo will typically appraise less than houses. Considering the expensive HOA fees a condo has, and the generally shorter ownership lifecycle in a condo, the appraised value is often less than a traditional single family house. Condos appeal to less buyers and cannot escape the rule of supply and demand.

Time To Make A Choice On Your New Home!

Today’s home buyer is faced with numerous types of homes. When you’re buying a home, remember, you are buying an investment. You want your property to appreciate overtime, and if you ever want to sell your home, you want to be able to sell with ease.

Although you need to love and live within your home, do your best to find a home that will retain and gain value overtime. Stick with a home style that's more traditional and in high demand. A very unique home may fit your lifestyle for a few years, but keeping this information in mind may be worthwhile for the future.


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This page last updated: March 21, 2022