A townhouse is a multi-story home that’s owned by individuals and is attached to at least one other similar unit. This type of hybrid dwelling combines features of a single-family home with a condominium — having some of the benefits and challenges of each. It’s also sometimes called a townhome or a row home or row house.
Key Points
• Townhouses combine features of single-family homes and condos.
• Townhouses are more affordable than detached homes but may cost more than condos.
• Maintenance is reduced, and amenities may be included.
• Owners control both interior and exterior spaces.
• Lot sizes are smaller than those for freestanding houses, offering less privacy.
Differences Between Townhomes and Condos
Differences between a detached home and a townhouse may be clearer than differences between a townhouse and a condo. After all, a home is a freestanding structure while a townhouse, like a condo, is part of a group of homes.
So, how is a townhouse different from a condo? Well, for one thing, although townhouses would share walls with units that are right next to theirs, there wouldn’t be a dwelling above them or below, as could be the case with a condo.
Typically, people who own a condo are responsible for the interior of their units, while funds that they pay into their homeowners’ association (HOA) are used to maintain shared areas and the outside of the building.
Townhouse owners, though, are usually responsible for maintaining the inside and outside alike, which is more like owning a freestanding house.
Because townhouse owners are usually responsible for more maintenance than condo owners, their HOA fees are often smaller and they typically have more freedom on how to renovate their dwellings. Neither of these is universally true, though, so it’s important to check the specifics of the property of interest.
Potential townhouse owners may be asking themselves, “Is buying a townhouse a good investment? What are the pros and cons?”
Let’s take a look at the pros and cons of buying a townhouse, along with insights into getting a mortgage loan.
Pros of Buying a Townhouse
Having control over the inside and outside of a townhouse might make buying one more appealing than purchasing a condominium. Townhome owners might appreciate how they have more ability to make decisions about their property.
Additional benefits of buying a townhouse include:
More Affordable
A townhouse can be an affordable option in communities with higher home prices, providing a space-savvy housing choice in places where available land can be scarce. Although townhouses may be more expensive than a condominium in a community of choice, they tend to be less expensive than a detached home.
Less Maintenance
Townhouses may be appealing to busy people; there’s no big yard that needs time and attention and, if owners travel for work and/or pleasure, security services that may be covered by HOA fees can help to protect the dwelling without any extra steps needed — and the townhouse complex may even be gated for added security.
Amenities
There may be great shared spaces and amenities for families to enjoy. These can include gyms and pools, and people who own units each have an ownership interest in these common-area benefits — which means they have a legal right to use them.
You Own the Land
Buyers of a townhouse will actually own the land where the building sits. In contrast, the condo owner would only own their unit, not any of the land. This means that someone owning a townhouse is typically less restricted on how the land could be used, perhaps being able to install a patio, for example.
Pay Less in Property Taxes
Owners of a townhouse usually pay less in property taxes when compared to a stand-alone home. This is typically true because of the smaller lot size.
Townhomes could be ideal for first-time homebuyers who are looking for a more affordable option in densely populated areas. It can also be a good choice for people who aren’t interested in doing much home maintenance.
Recommended: Track the Value of Your Home and Real Estate
Cons of Buying a Townhouse
Townhomes may not be ideal for everyone. If you don’t want to share walls with another family, for example, a townhouse may be eliminated.
Other potential downsides of buying a townhouse include:
Limited Lot Size
The limited lot sizes that make it easy to minimize maintenance also means that townhouse owners don’t have the benefits that come with a larger yard, whether that means hosting larger picnics, setting up a swing set for the kids, or creatively landscaping the space.
Less Privacy
Townhouses are less private than single-family homes. While there are no units above or below, as there would be with a condominium, walls are shared and backyards are fairly small. This may be problematic if young children living in the townhouse want to run around and play.
Potentially Many Stairs
Townhouses are built upward to maximize limited land, meaning a townhouse could be three or four stories with only a couple of rooms on each floor. This means stairs. Perhaps lots of stairs. If someone in the home has physical challenges or has recently had surgery — or just needs to carry a giant load of laundry down to the washer/dryer — navigating a townhouse can be difficult.
Less Appreciation
In general, the value of a townhouse does not appreciate as quickly as that of a single-family home. Because of this, it may not make sense to buy a townhouse if the idea is to invest in real estate, rather than simply having a desired place to live.
After reviewing the pros and cons, is buying a townhouse a good idea? Here’s one more consideration: financing the unit.
Financing a Townhouse
Seeking a mortgage loan for a townhouse is similar to getting one for a single-family home. That’s because, unlike a condo purchaser, the buyer of a townhouse also owns the land beneath the dwelling.
When buying a townhouse, lenders will typically want to see a buyer’s monthly income and outstanding debt to determine their debt-to-income ratio and see how much house they can afford. The lender will also check your credit score.
If the townhouse has HOA fees, those would be included in the mortgage calculations. Just as with a single-family home, it can make sense to get preapproved for a dollar amount before townhouse shopping.
The Takeaway
A townhouse can be a good solution for busy people who don’t have time to do lots of upkeep on their property. It’s also a popular choice for first-time homebuyers because of its relative affordability as compared to a freestanding house. Do you play an instrument, need a big yard, or crave solitude? An attached house with limited outdoor space might not be for you. Whatever home you choose, though, you will likely need a mortgage — and getting a loan for a townhouse is similar to getting a mortgage for a freestanding house.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
FAQ
Can you hear through the walls of a townhouse?
How much of your neighbors’ noise you can hear through the walls of a townhouse will depend on when and how the house was constructed. Older buildings may have thicker walls than newer homes. But either way, you get cozier with your neighbors when you share a wall. If you want total quiet, townhouse living probably isn’t for you.
Are townhouses hard to sell?
There’s no hard evidence that townhouses are hard to sell. In some communities, such as around large universities, townhouses move quickly as each wave of students and grads seek housing. And because townhouses are a good solution for first-time homebuyers, it’s generally true that as long as an area’s population has lots of new would-be homeowners, townhouses will move.
How is a townhouse different from a condo?
A townhouse will share at least one wall with a property next door. A condo could share walls but it may also have another unit below and above it. Both are fairly low-maintenance properties, but condo owners typically have to follow rules set by a homeowners association while townhouses aren’t always part of an HOA. But the biggest difference is in the ownership structure. Condo owners typically own their interior space. Townhome owners usually own the building and land beneath it.
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