"Living Unit" vs "Number of Bedrooms"

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Living Units vs Number of Bedrooms

Living units and number of bedrooms are both terms thrown around the real estate space often, but how are they different? "Living units" is a term used when discussing FHA loans. "Number of bedrooms" is a term which is specifically related to Fair Market Rents (FMRs) and rental property.

In short, a living unit refers to the number of entire housing units a property has. The number of bedrooms a property has is simply the number of private rooms a housing unit has. Bedrooms do not include common rooms, bathrooms, kitchens etc.

Why is the Number of Living Units Important?

Single-family homes are not the only type of property a buyer can obtain an FHA loan for. FHA loans can be obtained for multi-family housing including duplexes (2 living units), triplexes (3 living units), and quadplexes (4 living units).

HUD allows higher loan limits for multi-family homes since the loan is more likely to be paid off. Other families living on the property can contribute to the owner family's income through rental contracts. This increased income makes the loan a safer bet for HUD since the family can more reliably pay it off.

For more on Loan Limits go to the Loan Limits Overview by clicking here.

Why is the Number of Bedrooms Important?

The number of bedrooms is usually very closely associated with a rental property's value. Fair Market Rents are set with number of bedrooms in mind.

FMRs vary based on location and number of bedrooms. Within a specific county or zip code the FMR for a housing unit with a higher number of bedrooms will always be higher than a unit with less bedrooms.

To view Fair Market Rents and see how they vary in accordance with bedroom count click here to go to the Fair Market Rents Overview page.

The Takeaway

At the end of the day both the number of bedrooms and the number of living units increase property value. HUD provides more assistance for properties with a higher number of living units and properties with a higher number of bedrooms through increased Loan Limits and FMRs respectively.

Properties with more bedrooms can house larger families. Properties with more living units can house more families. Both of these outcomes align with HUDs goals of assisting people and reducing poverty. Although different, "number of bedrooms" and "number of living units" similarly allow hud to provide more assistance at a lower cost.



Arthur Williams

Arthur Williams

Arthur has been in real estate for over 15 years. He started his career as a real estate agent and then started investing himself. Arthur has experience navigating many different financing options, multi-family and single-family rentals, commercial real estate, and restoration projects.

June 23, 2022 (Updated June 24, 2022)