I'd like an explanation about how "residence" and "house" differ so much the second could not be accepted.
If you think of this as a Venn diagram all houses are residences but not all residences are houses (apartments, etc). So if they accept house they have to also accept any other word that fits the criteria. It's best to stick with the closest match to the definition in both languages here or it gets sticky fast.
But in brazilian portuguese "house", as "casa", can be only the place where can live people, without or with dwellers and owners. "Residence", as "residência", is always the "house" of someone, the "place" that is already a "home". If I didn't speak well or correctly, correct me or ask me, please.
Maybe its looking for a literal/specific translation since Portuguese has words for both, just as English does.
I don't know about Brazil. In Portugal, in the context of a university town, a "residência" is the closest thing they have to a dormitory building: a cheap place for students to live, sometimes with shared bathrooms or maids that clean the rooms.
However, on the Portuguese Wikipedia, "residência" redirects to "casa", so perhaps this is not universal.
There are some significant differences in pronunciation. For "r"s, those that Brazilians pronounce like the English "h" (at the beginning of words, as in "receber") are pronounced in Portugal as a guttural "r" (in the back of the throat, like in French and German). There are differences within Brazil as well; in much of the South of Brazil, "r"s (except at the beginning of words) are pronounced like in English.