What defines a residential mortgage?

A residential mortgage is specifically defined as a loan that is taken out to purchase residential property, which typically includes single-family homes, condominiums, townhouses, and sometimes multi-family units intended for residential use. This type of mortgage allows individuals or families to finance the purchase of their primary residence or second homes by using the property itself as collateral.

The key characteristic of a residential mortgage is that it is used for properties where people live, as opposed to commercial properties or other types of loans that serve different purposes. For instance, a loan for purchasing commercial property involves a different type of financing aimed at business activities, while a loan for purchasing a vehicle or luxury items is unrelated to real estate altogether. Thus, the correct answer focuses directly on loans intended for acquiring homes, which underlines the purpose and usage of residential mortgages in the housing market.