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If you’re looking to buy a condo or townhome, understanding the distinctions may help you home in on the choice that better suits your lifestyle and needs.

Read on to learn the major differences between these two kinds of property among the range of different house types.

Related: House or condo: Which is right for you?

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What Is a Condo?

A condominium is a private property within a larger property, whether that be a single building or a complex.

Residents share amenities like clubhouses, gyms, pools, parking, and the common grounds, and pay homeowners association (HOA) dues to support those shared assets.

If you buy a condo, you’ll own your interior space only.

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What Is a Townhouse?

You know what a typical townhome looks like, but what is a townhouse exactly? It’s a single-family unit that shares one or more walls with another home, usually has two or more floors, and may have a small backyard or patio.

If you buy a townhouse, you’ll own the interior and exterior of the unit and the land on which it sits. Upkeep of the exterior could be split between you and the HOA.

Both condos and townhomes are part of a larger structure, and both usually share one or more walls, but some similarities end there. Here are the key differences.

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1. Construction

In the condo vs. townhouse debate, construction differs. A townhouse will share at least one wall with a property next door. A condo could have another unit below and above it, in addition to neighbors on either side. That could mean sharing all surrounding walls and floors/ceilings.

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2. Actual Ownership

If you’re considering townhouse vs. condo, what would you actually own?

With townhomes, the buyer owns the land and the structure. That could mean some creativity with decorating the lot or the home’s exterior.

With condos, the buyer owns the interior of the unit and an “interest” (along with all of the other owners) in the common elements of the condominium project.

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3. Community

With both condos and townhouses, residents will get a feel for their neighbors. With shared walls and spaces, residents may have more social relationships with their community than they would with a single-family home.

It may be important for buyers to research the community when condo shopping. Is the condo social? Does it plan a lot of events, or do people generally keep to themselves? Since there are many shared spaces, understanding how the community functions could directly affect living there.

If a townhome isn’t part of an HOA, living in the complex could feel similar to living in a single-family home. In that case, it could be up to the buyer to create their sense of community.

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4. Homeowners Associations

Condos come with an HOA, a resident-led board that collects ongoing fees that can range from $200 to several thousand dollars and mandates any special assessments.

The HOA also enforces its covenants, conditions, and restrictions (CC&Rs).

Not all townhouse communities have an HOA, but if they do, townhouse owners usually pay lower monthly fees than condo owners because they pay for much of their own upkeep.

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5. Obligations and Regulations

What’s the difference between a townhouse and a condo regarding rules and regulations?

Condo owners will be required to meet all HOA standards. That could dictate anything from what residents want to hang on their doors to whether they can have pets, how many, and whether Biff is a service animal or emotional support animal. (Or, if a state like Florida has a new law on that matter, abiding by it.)

If an owner wants to renovate their condo, they may have to get the work approved by the HOA.

If a townhome is part of an HOA, many of the above restrictions could apply. However, if it’s not an HOA community, townhouse owners have more freedom to decorate the exterior of their home or maintain their landscape as they see fit.

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6. Insurance

Condos have their own form of property insurance. HO-6 provides coverage for the interior of a condo and the owner’s personal belongings. In addition, the entire building needs to be insured, which is paid for with HOA dues.

If a townhouse is part of an HOA community, each property requires HO-6 insurance and coverage for the community through HOA dues.

When a townhouse isn’t part of an HOA, buyers are typically required to have homeowners insurance.

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7. Fees and Expenses

HOA fees for condos are usually higher than for townhouses because they cover exterior maintenance and shared amenities.

If townhouse owners are part of an HOA, they’ll usually pay lower monthly fees because they pay for much of their own upkeep.

Condo owners don’t have to worry about repairing the roof or replacing siding. Everything exterior-facing is managed collectively, paid for with HOA dues, but those fees may be high and on the rise.

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8. Financing

It can be harder to obtain financing for a condo than for a townhouse.

Condos may be eligible for conventional mortgage loans and government-insured loans, part of mortgage basics. Lenders of conventional loans will review the financial health of an HOA, whether most of the units are owner-occupied, and ownership distribution.

The FHA and VA maintain respective lists of approved condos.

In the case of a townhouse, the financing process is similar to that of a traditional mortgage because a townhouse includes the land it’s built on. Its value is factored into the process.

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9. Resale Value

A large factor in a condo holding value is the management, which isn’t always in the hands of the owner. Strong management can help a condo maintain or grow in value. Additionally, where the condo is located will influence resale value.

Condos generally hold value but don’t see the boost in resale expected with single-family homes. Similarly, buying a townhouse will not usher in the appreciation of most single-family homes. HOA or not, townhomes won’t always make sense for the buyer looking for an investment.

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Condo vs Townhouse: Which May Be Right for You?

Condos and townhomes have their fair share of differences, as well as some similarities.

Overall, condos can offer a low-maintenance property where owners simply look after their condo interior. With condo ownership comes the added perk of shared amenities.

But condos come with monthly HOA fees, which must be factored into any purchase. Additionally, the community association and its management of the property will likely have a large impact on deciding to buy a unit or not. Condo buyers may be more community-minded, as they share space with their neighbors.

Townhouses offer more freedom and privacy than condos. Owners may have the option of personalizing their exterior and enjoying outdoor space if the property has a patio or backyard.

Townhomes generally require more responsibility and upkeep than a condo, even if there’s an HOA involved. Exterior maintenance will be required.

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3 Home Loan Tips

  1. To see a house in person, particularly in a tight or expensive market, you may need to show proof of pre-qualification to the real estate agent.
  2. 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 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.
  3. 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.

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Between condos and townhouses, which is cheaper to buy?

The cost of a condo and townhome will vary based on location and size, but condos are often less expensive than townhouses because they come with no land.

Do you own the land around a condo if you buy it?

No. The purchase of a condo only includes the interior.

Is the resale value higher for a condo or townhouse?

In general, condos and townhomes don’t appreciate as quickly as single-family homes. The value will vary based on area, upkeep, and other conditions.

Between condos and townhouses, which has better financing options?

Financing a townhome is like financing a single-family home. A buyer can choose from multiple types of mortgages.

Financing a condo, on the other hand, involves a lender review of the community or inclusion on a list of approved condominium communities. Because a private lender could see a condo as a riskier purchase, the interest rate could be higher unless a large down payment was made.

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The Takeaway

Townhouse or condo? The perfect fit is up to the individual, but buyers may want to take a hard look at monthly fees, community rules, how social they intend to be, and precisely what they own and must maintain.

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