When looking for a property to buy, you might consider a single-family detached home, a townhouse, a condo, a co-op apartment, or something else.
Let’s look at the pros and cons of buying a townhouse vs. a condo.
What Is a Townhouse?
At first glance, a townhouse might look like a detached multifloor home, but a closer look will show that it’s attached to at least one similar unit.
Townhouses are often found in urban areas where space is at a premium. They often come with a front or back yard. Owners own the inside and outside of their unit and the land it sits on.
The townhome community may have a homeowners association and maintenance fees.
First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.
Benefits of Buying a Townhouse
There are at least three upsides to purchasing a townhouse.
Owner Rights
Because people who buy a townhouse own the land it’s on, they have more freedom in how to use the yard. A yard or patio can open possibilities for a grilling spot or dog or child play area.
They also have at least some freedom of choice about the appearance of the inside and outside of the structure.
Price
In communities with high home prices, townhouses may be an affordable alternative for first-time homebuyers.
House hunters from millennial homebuyers to empty-nesters may also find a townhouse a sweet spot between a condo and a traditional detached home with yard.
Plus, because lots tend to be smaller than ones with detached homes on them, property taxes are usually lower as well.
Low Maintenance
Smaller yards mean less yardwork, ideal for busy people and those who are downsizing their home and responsibilities.
The townhouse complex may be gated and have security, and some have pools, gyms, and other shared recreational spaces whose maintenance is covered by homeowner fees.
Disadvantages of Buying a Townhouse
When you think of townhouse living, keep in mind the close quarters with neighbors and possible HOA fees and rules.
HOA
Townhouse communities are less likely to have an HOA than condominiums are, but if they do, the resident-led board will collect ongoing fees to cover common areas and any community perks such as a pool. The HOA will also enforce community rules.
Lack of Privacy
Because of the shared walls, a townhouse provides less privacy than a detached home (although more than many condo buildings, where you may have a unit above and below yours. Townhouse living may therefore create some challenges for families with young children.
What Is an Apartment?
An apartment is a room or set of rooms within a building. In major cities, some people refer to buying a condo or co-op shares as buying an apartment.
Condo owners own everything within their unit and have an interest in the common elements. “Buying a co-op apartment” really means holding shares in the housing cooperative that owns the property.
Then there are people and companies that buy a multifamily property like an apartment building and rent out the units. An owner could decide to live in one of the units and serve as an on-site landlord.
Benefits of Living in an Apartment
Let’s look at some benefits of buying a condo.
Low Maintenance
You won’t typically need to make many repairs, mow the grass, or paint. That’s covered by the monthly or quarterly fees you’ll pay.
Low Utilities
First, condos tend to be smaller than single-family homes, which can reduce the cost of heating and cooling the space, and take less electricity to keep it well lit.
HOA
If the building has an HOA, the association will take care of property maintenance and enforcement of rules.
Disadvantages of Living in an Apartment
Apartment life can come with disadvantages, too. Here are a few.
Parking
You may or may not have a parking space set aside for you, and street parking isn’t always a given in busy locales. Even if you have a parking spot, if people come to visit, they may not easily find anywhere to park.
Noisy or Nosy Neighbors
If you appreciate quiet calmness, you may not find all you’d like in condo living. Neighbors are nearby and they may appreciate louder and more frequent interactions than you’d prefer. If you’re in a crowded city, surrounding events can contribute to the jostling and noise.
Limited Space
If you’re used to living in a house, you could find a more compact apartment to be challenging as you try to fit in your belongings. Plus, it isn’t unusual not to have yard space or a patio, which further limits the amount of space you have to use and enjoy.
Differences Between a Townhouse and an Apartment
When comparing apartment or condo vs. townhouse, keep in mind these differences.
| Townhouse | Apartment/Condo |
|---|---|
| Single-family unit that shares one or more walls with another home | Room or rooms within a building |
| May have a small yard or patio | If an HOA is in place, it will collect fees to cover most maintenance. |
| Gives owner some control over how to change the exterior and use yard | Typically comes with lower utility bills than a traditional home |
| Can be more affordable than traditional detached homes in markets with high prices | May not come with convenient parking |
| If there’s an HOA, fees are usually lower because owners are responsible for much of their own upkeep | Means you may have noisy or nosy neighbors |
| May not provide as much privacy as desired | Often has less space than some other types of homes |
| Thanks to the land ownership, financing is similar to a traditional mortgage | It can be harder to finance a condo than a townhouse |
3 Home Loan Tips
1. 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.
2. 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.
3. Generally, the lower your debt-to-income ratio, the better loan terms you’ll be offered. One way to improve your ratio is to increase your income (hello, side hustle!). Another way is to consolidate your debt and lower your monthly debt payments.
FAQ
Do townhomes appreciate as much as houses?
In general, townhomes do not appreciate as quickly as single-family detached homes, thanks to the amount of land that comes with traditional stand-alone homes.
Are townhouses a bad investment?
In some circumstances, a townhouse may be a good investment. The price, current market conditions, and location are factors.
Are fees higher for a townhouse or condo?
Condo HOA dues are typically a lot higher than townhouse fees (if the townhouse community even has an HOA). Condo communities usually have many more amenities to maintain.
Photo credit: iStock/Auseklis
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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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