A duplex or townhouse can be a more affordable alternative to a detached single-family home, yet offer a taste of that residential lifestyle. These medium-density housing choices are sandwiched between suburban and high-density development.
When deciding on a duplex vs. townhouse, consider the amount of space you need, the amount of maintenance you want to do, your budget, and whether the rental component of a duplex — or Aunt Jill, Cousin Joe, or Mom next door — appeals to you.
Let’s take a deep dive into the differences between a duplex and townhouse.
What Is a Duplex?
A duplex is a single structure with two conjoined units on one plot of land. Each unit has its own entrance, kitchen, beds and baths. The two units often share the yard, laundry area, and garage space, but that isn’t always the case.
A duplex shouldn’t be confused with a “twin home,” which is two homes that share a wall, but each unit and the land it sits on is individually owned. The lot line actually runs through the common wall.
Buying a duplex is often touted as a good investment because owners can rent out one side while living in the other.
First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.
Types of Duplexes
There are two common configurations when it comes to duplex living:
• Side by side. The shared wall is in the middle.
• Up and down. When the units are in an upstairs and downstairs arrangement, the dividing wall is the floor/ceiling.
What Are the Pros and Cons of Duplex Living?
Duplexes are in demand, often by first-time homebuyers.
Owner-occupants have a big financing advantage: If you buy a multifamily property of four or fewer units and plan to live onsite, you can use an FHA loan with a low down payment or a VA loan, if you’re eligible, with no down payment at all.
There are other upsides, and potential downsides, you may want to consider before deciding on a townhouse vs. duplex.
| Duplex Pros | Duplex Cons |
|---|---|
| May be more affordable than a traditional single-family home | Shared wall and yard means limited privacy |
| Usually less maintenance than a single- family home | Owners still have some maintenance responsibilities |
| More residential feel than an apartment | Usually more expensive than a condo |
| Half or all can be rented out | The neighbor sharing your wall may be loud, or a relative next door could be intrusive |
| Usually has a washer and dryer | If both units will be rented out, an investment property loan typically calls for 25% down and has a higher mortgage rate |
What Is a Townhouse?
You get the idea about duplexes, but what is a townhouse? A townhouse is an individually owned home with two or more stories and at least one shared wall.
You own the inside and outside of your unit and the land it rests on, whereas a condo owner owns the interior of the condo. A townhouse has a separate entrance but may share communal spaces.
Townhouses are often found where land is in short supply. This is particularly true in areas that transition from dense, urban cities to the suburbs. They make good use of the space with their vertical nature and shared walls.
They are typically lower priced than detached single-family homes. By the way, the U.S. Census Bureau, which tracks residential construction, considers townhouses and duplexes single-family homes.
Townhome ownership has been rising, and the National Association of Home Builders (NAHB) says the long-term prospects for townhouse construction remain positive as homebuyers seek medium-density residential neighborhoods such as urban villages.
The NAHB expects townhouses to comprise more than 15% of all single-family homes in the coming years.
What Are the Pros and Cons of Townhouse Living?
As the prices of traditional single-family homes have gone through the roof in most markets, townhomes have become popular as starter homes.
And downsizers may be attracted to townhouses, whose cost may be lower than their detached counterparts.
Townhouses make great use of space, but they also have less privacy, and you may need to follow the rules of a homeowners association, if one exists. (In the condo vs. townhouse comparison, condos come with an HOA, but not all townhouse communities do.)
Financing a townhouse works just like financing any single-family home. Here are pros and cons of buying a townhouse compared with a detached single-family home.
| Townhouse Pros | Townhouse Cons |
|---|---|
| Typically more affordable | May not appreciate as much |
| May share cost of maintenance in the development | Less privacy |
| Townhomes may have amenities attractive to residents | Owners may need to pay dues each month as well as special assessments |
| Full ownership of a property | Neighbors are closer together |
| Small yard or patio requires less maintenance | Yard or patio tends to be small |
Recommended: Visit the Home Loan Help Center
Weighing the Differences Between Duplexes and Townhouse
Taking a look at living in a duplex vs. a townhouse side by side, they have commonalities but also differences. Here are some.
Structure and Design
A townhome typically is in a planned unit development where the homes share walls and community spaces. A duplex is structured to share a yard and a wall with only one neighbor.
Purchase Price
Cost will vary based on square footage, neighborhood, amenities, lot size, and other factors. A duplex will usually cost more than buying a townhouse, but the tradeoff is that you can rent out one side.
Maintenance Cost
A townhouse may have HOA dues, though they might not be ample because owners are responsible for much of their own maintenance. A duplex owner will need to maintain both units and the yard. A comparison will depend on the size and age of the properties and more.
Rental Income
If you plan to rent out a townhouse you buy, it’s a single unit. A duplex has two units, so it may be easier to make the financials work.
Privacy
With a townhome, you’ll be living in a community. Compare that with a duplex, where you’re sharing space with one neighbor.
Then again, having a single neighbor might feel less private than if you had many.
Investment Value
The ability to rent at least one side of a duplex holds more investment value than a townhome. The townhome may also have HOA rules about renting that may not jibe with your idea of how to use your property.
The Takeaway
The difference between a townhouse and a duplex is what fits your lifestyle. A duplex can offer a larger yard and rental potential, but a townhouse may bring that single-family home vibe at a lower price point than a duplex.
3 Home Loan Tips
- Traditionally, mortgage lenders like to see a 20% down payment. But some lenders, such as SoFi, allow home mortgage loans with as little as 3% down for qualifying first-time homebuyers.
- Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.
- Your parents or grandparents probably got mortgages for 30 years. But these days, you can get them for 20, 15, or 10 years — and pay less interest over the life of the loan.
FAQ
Are townhomes becoming more popular?
The market share of townhomes is rising. According to the National Association of Home Builders, more townhomes were built in 2022 (152,000) than the previous year (122,000), representing 13.4% of all new single-family starts.
Which is a better investment: a duplex or a townhouse?
A duplex may be the better investment because you have the potential to rent out both units or live in one and collect rent from the other.
Is it faster to build a duplex or a townhouse?
A lot of factors affect how long it takes to build your new home: size, location, materials, weather, subcontractors, the city or county building department, and the complexity of your building plans. Many townhomes are built at once and may become available more quickly. Construction of a duplex is more like a house.
Photo credit: iStock/peterspiro
SoFi Mortgages
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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