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Townhouse vs Condo: What’s the Difference?

Townhouse vs Condo: What’s the Difference?
Rita Williams
Home.com Contributor

There are many advantages to opting for a townhouse and condo living over a standard, single-family house. Chief among them is cost – townhouses and condos tend to have lower list prices (not to mention less maintenance) than conventional houses.

But how do you know which is right for you? And what’s the difference between a townhouse and condo anyway?

We’ll explain the ins and outs of these properties so you can decide which makes the most sense for your needs.

What's in this Article?

What’s the difference between a townhouse and a condo?
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HOA fees and amenities
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Pros and cons
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Loan types
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Frequently asked questions
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Key takeaways
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What’s the difference between a townhouse and a condo?

Townhouses are much like single-family homes, but rather than being free-standing, they are attached to other townhouses. You own, and are responsible for, your own unit and the land underneath it. In many townhouses, you may have a front or back yard, or both.

A row of attached townhouses.

Condominiums (condos) are single-unit dwellings within larger multi-unit buildings, somewhat like apartments. If you own a condo, you own your unit only – not the land on which the condo sits. Many condos have patios or balconies, so you may have some outdoor space. But you don’t own any land and are unlikely to have private yard access. You are responsible for maintaining only the interior of your unit.

A condo building with stacked units.

So the major difference between townhouses and condos is whether you own the land on which the property is built.

There are some common architectural and location differences between the two as well.

Most townhouses are two or three stories and look like multi-level homes which are attached to each other. Typically, one townhome does not stack on top of another.

Condo complexes may be built much higher, and you can have another condo owner above or below your unit. Townhouses are typically located in the suburbs, while condos may be either in cities or suburbs. But be aware that these differences don’t determine whether a home is a townhouse or a condo — only the difference in owning land or not does.

Townhouse vs condo: HOA fees and amenities

In both townhouse and condo communities, common areas and property within the development are owned and maintained by a homeowners association (HOA). In exchange for the maintenance, residents pay a HOA fee, usually on a monthly basis.

HOAs explained

HOAs employ staff who administer the development, maintenance, and upkeep of the community. Most HOAs also have board members who are residents of the development and are voted in by their peers.

If you plan to purchase a townhouse or condo in an HOA community, lenders will need to know how much your monthly fees will be. The fee will be calculated into your debt-to-income ratio (DTI) when they determine how much you can afford in a monthly mortgage payment.

Be aware that the fees are likely to rise over time. At times, the HOA may also charge special assessments.

These usually occur when something major needs to be added or repaired, such as new property signage, sidewalk maintenance, or siding or roof replacement. A well-run HOA will collect enough in dues over time for major repairs, but not all do. It’s wise to look into the HOA’s financials to make sure there’s an adequate rainy day fund. Your real estate agent can help you get a copy of the HOA’s books.

HOAs typically have strict guidelines regarding how the property may be used, including whether you can rent out the condo or townhouse. Additionally, they can dictate which colors you’re allowed to paint the home, what type of decorative elements you can add, and even the types of pets you can have.

HOAs in townhouses vs condos

HOAs in condo communities typically maintain interior common areas, such as hallways and stairwells. They also maintain the development’s grounds, as well as any amenities on them. Condo developments often provide residents access to features such as swimming pools, tennis courts, and gyms.

Townhouse HOAs are generally less involved in maintaining the community’s property because townhouse owners own most of the land. And since townhouses have separate entrances to each residence, there are no common interior spaces to maintain. Townhouse owners are also responsible for maintaining their own yards.

Townhouse HOAs may own and maintain common grounds, such as common lawns, parking lots, and any amenities, such as swimming pools. But typically, townhouses have fewer community amenities than condos.

As a result, townhouse HOA fees may be lower than condo HOA fees. But there is wide variation, depending on amenities, age of the development, and size of the grounds.

What are the advantages and disadvantages of townhouses and condos?

Condos and townhouses (attached residences) have unique pros and cons when comparing them with a traditional detached house.

Condos and townhouse pros and cons

Pros of an attached residenceCons of an attached residence
More affordable sale price, due to less square footage and propertyLess privacy because you’ll share a wall with at least one neighbor
Less maintenance and upkeep because of HOAsHOA rules restrict how you decorate and modify the property, and possibly even pets you can have
Potential to become a rental property, since renters like affordability and convenienceHOA may have limits on rentals or AirBnB options

Townhouse and condo pros and cons

Now let’s look at how townhouses and condos stack up against each other.

Townhouse pros and cons

Townhouse prosTownhouse cons
Appreciation is more likely to be in line with single-family houses than you’d see with a condoOptions for how you use your land may be limited by HOA rules
You own the land on which the home sitsLand available for gardening and recreation may be limited
More likely to have yard space for gardening, entertaining, or play areasHOA fees can increase over time, and you may not agree with all HOA decisions

Condo pros and cons

Condo prosCondo cons
HOA likely takes care of shoveling snow, raking leaves, salting parking lot and pathways when they’re covered in iceNo property if you like to garden or have a yard area for children or to entertain
More common than townhouses in urban areasHOA fees can increase over time, and you may not agree with all HOA decisions
Less maintenance and upkeep because you don’t own the property on which the condo sits or the exterior of the buildingSome loan programs have restrictions on which condos can be approved, so the homebuying process can be slightly more challenging

What types of loans can you use to buy a townhouse and condo?

In general, you can use all of the common loan types to buy a townhouse or a condo:

Some restrictions do apply for government-backed loans for condos, though.

For a loan backed by the Federal Housing Administration, the condo must be on the FHA-approved list. You can search for approved condo properties on the U.S. Department of Housing and Urban Development (HUD) website.

For loans backed by the Veterans Administration, the condo must be on the VA-approved list.

For loans backed by the U.S. Department of Agriculture, the condo must meet the requirements of at least one other program, such as Fannie Mae, Freddie Mac, the VA, or the Department of Housing and Urban Development (HUD).

Townhouse vs condo FAQs

What are the disadvantages of living in a townhouse?

Townhouses are not as private as single-family homes, because you share walls with neighbors.

In addition, the HOA may have rules in place that give you less freedom than a single-family house would. You may not be able to paint the home’s exterior the color of your choice, and you may not be able to own the type of pet you want.

Townhouse communities sometimes offer fewer community amenities than condo developments, and they tend to be in suburban areas rather than in metro hot spots.

What appreciates more, a condo or townhouse?

Townhouses generally appreciate at a faster rate, more in line with single-family home prices than condos. But remember that appreciation depends on demand. If the market is strong for condos in your area, condos can appreciate in line with stand-alone homes, too. It’s a good idea to check the sales price history for condos in your town before you buy.

What are the benefits of living in a townhouse?

When you purchase a townhouse, you own the home plus the land it’s built on. With a condo, you own the individual unit but not the property. Townhouses are more likely to include a yard or outdoor area, and they tend to offer more privacy than a condo. You won’t have a neighbor above or below you, so you don’t have to worry that you have a heavy stepper upstairs. But sound can still come through the walls, since you’ll likely have a neighbor on one or both sides.

Because the townhouse will likely be in an HOA, you will have fewer maintenance and upkeep responsibilities than you would in a single-family home.

The bottom line

Both townhouses and condos are great options for homebuyers. The right choice for you will depend on your lifestyle and how much autonomy you want to have on the property. Some people want the yard and the extra space afforded by a townhome. But condo owners get the benefit of owning a great home without having to worry about lawn care or property upkeep.

Either way, what matters most is that you choose the option that works with your budget and that feels like home.

Key Takeaways:

  • Townhouse purchases include the individual unit plus the property on which it sits
  • When buying a condo, you are only purchasing the residential unit. You don’t own any land
  • Both townhouses and condos typically have homeowners associations that govern and maintain the community

Further Reading

What’s the Minimum Credit Score For a Conventional Loan?

Conventional Loan Mortgage Rates: Are They Rising In 2021?

PMI on a Conventional Loan: Your Questions Answered