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What Is an Apartment? Should You Consider Owning One?

By Emma Diehl · September 22, 2022 · 7 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

What Is an Apartment? Should You Consider Owning One?

If you’re thinking about buying an apartment, you’ll probably look at co-ops and condos rather than single-family homes.

Read on to understand the difference between condos and co-ops, the forms an apartment might take, and who might be best suited to buy one.

What Is an Apartment?

An apartment is a property within a larger building, and especially in big cities, it’s not uncommon to hear that someone is buying an apartment.

When a buyer is considering different types of homes, the price of an apartment often beats that of a single-family home with land.

Both co-ops and condos allow residents to use the common areas, including pools, gyms, and courtyards. If you buy a condo, you’ll own everything within your unit and have an interest in the common elements. If you “buy a co-op apartment,” that really means you’ll hold shares in the residents’ housing cooperative, a nonprofit corporation that owns the property, and will have the right to live in one of the co-op units. Shares are based on the market value of each unit.

Getting a mortgage for a co-op might be harder than for a condo. You aren’t actually buying real estate with the former.

And monthly fees tend to be higher at a co-op than for a condo.

Then again, the co-op fee may cover more, co-op units tend to cost less per square foot, and the closing costs of a co-op deal are often lower.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

What Are the Types of Apartments?

Diving further into the definition, the apartment shape-shifts. While they may all technically be apartments, each comes with its own quirks and defining characteristics.

Layouts or terminology may vary by building or region.


The ultimate open-concept space, a studio is a one-room apartment with a bathroom. The bedroom, living room, dining room, and kitchen are all in a single room.

Alcove Studio

An alcove studio, if L shaped, has a built-in nook to signify where a bed and small dresser could go. Older units might put the alcove in the middle of the room. If an average studio is 550 square feet, the alcove might add 40 — not much, but a big dose of privacy.

Alcove studio apartments are often more expensive than studios but cheaper than true one-bedroom units.

Convertible Apartment

A step up, size-wise, from a traditional studio, a convertible apartment may have a bedroom or a flex space that could be used as an office. The space might have a sliding glass door or partial wall that has an opening instead of a door.

By some definitions, a convertible apartment is bigger than a typical studio but doesn’t quite have the square footage of a one-bedroom unit. A bedroom, according to New York City regulations, must be at least 80 square feet and have space for at least one window of 12 square feet or larger.


The micro-apartment might be the perfect fit for a minimalist. Usually micro-apartments are even smaller than studios, at about 350 square feet, and are popular in densely populated, high-cost cities. Micro-apartments offer enough space for a bed, sitting area, kitchenette, and tiny bathroom.

A micro-apartment might have a Murphy bed or a futon that folds into a bed at night.


Lofts are typically retrofitted from a factory or other commercial building. In one open space (except the bathroom), lofts have high ceilings, large windows, and perhaps an overall industrial feel.

Garden Apartment

A garden apartment can refer to two distinct types of units, so buyers should pay attention. A garden apartment can be a unit in the basement or on the ground floor of a small apartment building.

A garden apartment can also mean apartment buildings surrounded by greenery in either an urban or suburban area. These buildings are typically no higher than three stories and have access to green space, such as a park or trail.


A high-rise apartment building has 12 floors or more. When apartment buildings enter high-rise territory, residents can expect one or more elevators.


A mid-rise apartment building is between five and 11 stories tall. Expect an elevator in the building.


A low-rise apartment building is anything shorter than five stories. With a low-rise apartment, there’s no guarantee of an elevator.

Railroad Apartment

A railroad apartment is laid out like a train car, meaning one room leads to the next without a hallway. Railroad apartments are typically found in older buildings or converted properties.


In a walk-up, residents should expect to, well, walk up to their apartment. The designation implies that the building doesn’t have an elevator.

Walk-up apartments are often more affordable than elevator-accessible units, as stairs may be inconvenient or unmanageable.

Should You Live In an Apartment? Who Are Apartments Best Suited for?

Apartment living isn’t for everyone. Those best suited to an apartment might want some or all of the following:

•   City living. Apartments are often in densely populated areas, meaning residents want to be near the hustle and bustle.

•   Limited space. Apartments typically have less space than traditional family homes, so they are often best suited for small families or singles.

•   Low maintenance. Exterior repairs and maintenance, and even some utilities, are up to the building at large, not the resident.

•   Relatively good price. Apartments are typically more affordable than nearby single-family homes, meaning they could be a good fit for the price-sensitive buyer.

•   Minimal lifestyle. Those who don’t need a lot of space may prefer a condo or co-op unit to a sprawling home.

Pros and Cons of Living in an Apartment

As with any type of home, living in an apartment comes with its benefits and drawbacks.



Outdoor space Residents aren’t responsible for maintaining exterior or green space. Limited or no private green outdoor space.
Maintenance Residents are typically responsible for their unit alone. The monthly fee can be high and on the rise.
Group living Neighborly vibe and shared amenities that could include a gym, pool, rooftop patio, and business center or community room. Close proximity to neighbors, often with one or more shared walls, floors, or ceilings.
Square footage Apartments are often smaller, which means less upkeep, from cleaning to repairs. Smaller spaces can mean less storage and room to spread out.
Affordability Apartments tend to be more affordable than single-family homes in the same area. Condos and co-op units don’t appreciate as quickly as single-family homes.

The Takeaway

If you’re interested in buying an apartment, you’re probably talking about a condo or co-op unit. Apartments come in all shapes and sizes and can be a little trickier to finance than traditional homes.

SoFi can help. Are you a first-time homebuyer? Check out the guide to first-time home buying.

Also head to the help center for home loans and learn more.

3 Home Loan Tips

  1. Traditionally, mortgage lenders like to see a 20% down payment. But some lenders, such as SoFi, allow fixed rate mortgages with as little as 3% down for qualifying first-time homebuyers.
  2. 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.
  3. Not to be confused with pre-qualification, pre-approval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for pre-approval 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.


What are the costs of owning an apartment?

Apartments come with a monthly fee. Condo fees are usually lower than a co-op’s, because the latter fee can include payment for the building’s mortgage and property taxes, utilities, maintenance, and security.

Is it a good idea to buy an apartment?

For a buyer focused on less maintenance and typically limited square footage, an apartment may be the right fit.

What should I look for when renting an apartment?

One of the first things to ask when renting an apartment is what is included. Does rent include any utilities, laundry in the unit, or parking?

It’s a good idea to also ask about credit requirements, application fee, security deposit, and terms of the lease.

What credit score do you need to rent an apartment by yourself?

All landlords are different, but many look for a FICO® score above 600. Not all property managers look at credit scores, though.

Photo credit: iStock/hrabar

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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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