Many people dream of owning their own home, but the reality of skyrocketing home prices can quickly shatter that dream. When mortgage rates and prices soar, some first-time home buyers find themselves priced out of the housing market—but there’s hope.
Townhouses, which are multi-level homes with shared walls between neighbors—can be an affordable solution for those looking to step onto the property ladder.
Verify your first-time home buyer eligibility. Start hereIn this article (Skip to...)
- Difference between a townhouse and house
- Are townhouses considered condominiums?
- Pros and cons of owning a townhouse
- How to finance a townhouse
- Tips for purchasing a townhouse
- FAQ
What is the difference between a townhouse and a single-family home?
A townhouse, also known as a townhome, is a type of residence that shares walls with adjacent properties. It’s usually a multi-story building, often two or three stories high, with its own entrance from the street.
Verify your first-time home buyer eligibility. Start hereSingle-family homes, on the other hand, are standalone detached houses.
The layout of a townhouse can be more compact, vertical and narrower, and they often have smaller yards and patios. Some single-family homes have more spacious indoor and outdoor living spaces.
In terms of ownership, buying a townhouse means owning both the interior and exterior of the unit, including the land it sits on. This is similar to owning a single-family house. Therefore, you’re responsible for all maintenance, both inside and outside the property.
Are townhouses considered condominiums?
Townhouses and condominiums are similar, in that they’re attached to one or more other units and share walls with neighboring properties. However, these aren’t the same type of properties.
Condominiums, or condos, can take various forms, including apartment-style units within a building or individual units in a complex.
Verify your first-time home buyer eligibility. Start hereBut whereas townhouse owners own the interior and exterior of their unit, condo owners only own the interior of their unit and not the land it sits on.
Instead, the exterior, land, and common areas such as the clubhouse, are owned by a separate entity and managed through a homeowner’s association (HOA). Condo owners pay monthly fees to the HOA, which is responsible for maintaining the outside of units, common areas, and community amenities.
A townhouse community might or might not have an HOA. In communities with one, the association typically takes care of the landscaping and communal areas (parks, swimming pools, fitness center, trash collection, etc.)
HOA fees for townhouses can vary widely depending on the location, amenities, and services provided. Some even include snow removal or landscaping. On average, HOA fees for townhouses range from $100 to $500 per month.
Pros and cons of owning a townhouse
Thinking of buying a townhouse? Here are a few advantages and disadvantages to consider for this type of housing.
Verify your first-time home buyer eligibility. Start herePros:
- Affordability: Townhouses are often more affordable than single-family homes, making homeownership more attainable for first-time home buyers.
- Less maintenance: Townhouses typically have smaller yards and square footage compared to single-family homes, making them easier to maintain. This results in less outdoor upkeep and lower maintenance costs.
- Amenities: Some townhouse communities have amenities like swimming pools, gyms, and parks.
- Security: With neighbors close by, townhouses can provide a sense of security.
Cons:
- Less privacy: Townhouses share walls with neighboring units, which means less privacy compared to single-family homes.
- Homeowner’s association (HOA) fees: While HOA fees cover some maintenance and amenities, they add to the overall cost of homeownership. Additionally, you must abide by HOA rules and fees can increase over time.
- Limited exterior space: Townhouses typically have smaller yards, limiting outdoor space for activities.
- Resale value: Although townhouses can be more affordable, they might not have as good a resale value as single-family homes.
How to finance a townhouse
If you’re interested in buying a townhouse as your first home, you can choose between several mortgage programs.
Verify your first-time home buyer eligibility. Start hereFor example, FHA loans—backed by the Federal Housing Administration—are perfect for first-time buyers due to their low down payment and flexible credit requirement. You can buy with as little as 3.5% down and a 580 credit score.
Another option is a VA loan, which is available to eligible veterans, active-duty service members, and select military spouses. These offer competitive interest rates, and you can buy with no down payment or mortgage insurance.
A USDA loan, offered by the U.S. Department of Agriculture, is great for buyers looking for properties in rural areas. They also require no money down.
Conventional loans are an option too. They typically have higher down payments (around 5% to 20%) but offer more flexibility with regard to property types. They’re a good fit if you have strong credit and stable income.
Tips for evaluating the purchase of a townhouse
Before buying a townhouse it’s important to be honest about your lifestyle and housing needs.
Although townhouses are ideal for buyers looking for a more affordable property with less maintenance, seriously consider whether you’re okay with shared walls and potentially limited outdoor space.
Verify your first-time home buyer eligibility. Start hereAlso, look beyond the purchase price and factor in ongoing expenses such as HOA fees, homeowners insurance, utilities, maintenance, and property taxes. Make sure you understand the full cost of ownership and how it fits into your budget.
Consider the location of the townhouse community. Are you comfortable with the neighborhood? Does the community offer sought-after amenities, such as parks, swimming pools, or a fitness center?
Finally, think about your long-term plans. Will the townhouse meet your needs in the foreseeable future, or do you anticipate outgrowing it?
Conclusion
Choosing a townhouse as your first home has its benefits. They are usually less expensive and require less maintenance, making the transition from renter to owner easier.
With low down payment mortgage options and down payment assistance programs, owning a townhouse is within reach. Evaluate your needs and budget, and then speak with a mortgage and real estate agent to explore your options and find the perfect townhouse to call home.
What is a townhouse FAQ
Time to make a move? Let us find the right mortgage for youA townhouse is a multi-level residential dwelling that shares one or more walls with neighboring units, typically arranged in rows or blocks within a community.
While both are forms of attached housing, townhouses typically have multiple floors and may have a small yard, while condos are usually single-level units within a larger complex.
Common features of townhouses include multiple floors, shared walls with neighboring units, attached garages, and sometimes private outdoor spaces like patios or balconies.
Yes, townhouse owners often pay HOA fees to cover shared amenities, maintenance of common areas, and other community expenses.
Living in a townhouse offers benefits such as lower maintenance, shared amenities, often more affordable than single-family homes, and a sense of community.
Townhouses can be a good investment for those looking for lower maintenance housing options, potential rental income, and the opportunity to build equity over time.
Before buying a townhouse, consider factors such as the HOA rules and fees, proximity to amenities, neighborhood dynamics, and potential resale value.
Yes, townhouses can often be rented out, but it’s important to review the HOA rules and local regulations regarding rental properties.
