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Condo Vs. Apartment: A Guide

April 21, 2024 7-minute read

Author: Lauren Nowacki

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Buyers who want to own their living space, but want some of the benefits that come with apartment living, may find what they’re looking for with a condominium. While condos share similarities with apartments, they’re not one and the same. So what exactly is the difference when it comes to a condo vs apartment?

Condominium Vs. Apartment: Key Differences To Consider

Condos and apartments differ in various ways, including cost, maintenance, amenities, and more, but the most significant difference between the two is ownership. While condos and apartments are known to exist within a larger residential building, a condo is owned while an apartment is rented.

Ownership

One of the main differences between a condo and an apartment is ownership. While people typically rent apartments, they purchase condos. By doing so, condo owners can build equity as they make their monthly mortgage payment. That’s the biggest downfall of renting – the money you pay goes into the landlord’s pocket.

Cost

The difference in cost isn’t just a mortgage payment vs. rent payment. There are also differences in upfront fees and recurring costs.

Condo Costs

Depending on your location, loan amount, interest rate and terms, your monthly payment may be higher than rent. And if you’re getting a mortgage to purchase your condo, there are other expenses to consider than just the monthly payment.

  • Down payment: A down payment is a percentage of the condo’s purchase price that you pay out of pocket. Depending on your loan, you’ll pay a minimum down payment of 3% – 3.5%.
  • Private mortgage insurance: Depending on loan type, if your down payment is less than 20% you’ll need to pay mortgage insurance. This helps protect the lender should you default on your loan.
  • Closing costs: Along with the down payment, you’ll pay closing costs, which are the fees associated with creating your loan. These may include an origination fee, title insurance and recording fees.
  • Monthly mortgage payment: Paying back mortgages is done through monthly payments. But you aren’t just paying back the loan in this payment. You’ll also be paying interest on the loan and paying money into an escrow fund – which will pay your property taxes and insurance on your behalf.
  • Homeowners insurance: Most mortgage lenders require homeowners insurance to protect their investment. It also protects your wallet and home by covering damage caused by certain natural disasters, fire and vandalism.
  • Property taxes: Every homeowner pays property taxes, which go toward funding local services, like public schooling, police and fire safety.
  • Utilities: As the property owner, you are responsible for paying for such utilities as water, gas, electric and trash collection.
  • Cooperative or homeowners association (HOA) fees: Many condos will have condo association or HOA fees. These fees help pay for amenities, community services and shared area maintenance.
  • Maintenance and repairs: When you own a property, the responsibility is on you to keep it well maintained. That means you are responsible for paying for maintenance and repairs, if not covered by insurance.

Apartment Costs

As a renter, some of the financial responsibility falls on your landlord. That typically includes most maintenance costs, property taxes and insurance. However, there are some expenses that are unique to apartments.

  • Security deposit: A security deposit it an upfront fee you pay when you first sign your lease. This is kept by the landlord to pay for any damages they may need to pay for after you move out. If you leave the apartment in good condition when you leave, you may get this deposit back.
  • Monthly rent: This is the monthly cost of renting the space you live in. Your monthly rent is laid out in your lease and cannot change until your lease term is up.
  • Utilities: The landlord may have you pay for some utilities on your own or they may be rolled into your rent payment.
  • Renters insurance: Rental insurance is usually optional (though landlords can sometimes require it) and protects your personal property from unexpected loss.

Maintenance

You’ll need to handle scheduling and paying for the maintenance and repairs for a condo – or perform them yourself, while you likely won’t be responsible for paying for maintenance when renting an apartment. Your landlord may even call to schedule the repair. Some apartments may also have maintenance people on staff.

Amenities

Both apartments and condos feature a variety of amenities, including pools, fitness centers, community spaces and parking spaces, garages or carports. The amenities that are offered will be different for every property.

HOA Rules

While owning affords you more freedom, condos typically have a condo board, cooperative or homeowners association (HOA) that sets rules you’ll need to abide by. Apartments may not have these, but they often come with strict rules from the landlord, which may limit how you decorate and set up your space.

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Advantages And Drawbacks Of Buying A Condo

As with any big decision, it’s helpful to weigh the pros and cons before making your move.

Advantages Of Buying A Condo

A condo allows you to own the place you’re living without some of the disadvantages that come with single-family homes or apartments. Other pros of condo living include:

  • Better affordability: Depending on the properties, condos are typically more affordable than single family homes. While the average price for a single-family home is $384,500, the average is $343,800 for a condo, according to the National Association of REALTORS® (NAR).
  • Access to amenities: Condo communities often have some of the same amenities that make apartments attractive. These may include pools, fitness centers and community spaces.
  • Freedom to customize: While there may still be some rules when it comes to making changes to your home, you have much more freedom to customize it than you would in an apartment.

Drawbacks Of Buying A Condo

There are some drawbacks of condo living that may make it less desirable for some buyers.

  • Less privacy: Condos are often connected – meaning you’ll share at least one wall with your neighbor – or close together. That means you may have less privacy.
  • Association fees and rules: Most condos have a condo board, cooperative or homeowners association. That means you may have to pay fees and follow rules set by this group.
  • Parking issues: In some complexes, parking may be limited. While you may have a guaranteed spot, your guests may not. Along with that, some complexes don’t have covered parking or spots close to your home.

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Advantages And Drawbacks Of Renting An Apartment

Apartment living can offer a little more flexibility and affordability, but less freedom to make your living space completely your own. When deciding whether renting’s the right choice, think about these pros and cons.

Advantages Of Renting An Apartment

When you rent an apartment, you have less responsibility and commitment – and potentially more savings.

  • More affordable than a single-family house: Depending on your space and its location, apartments are typically cheaper than owning a condo. With a condo, you’re paying insurance, taxes and maintenance costs. Your utilities are likely higher as well.
  • Flexibility: When you have an apartment, you’re usually only tied to your lease for a year or so – and, often, you can break your lease, though you’ll have to pay. When you have a mortgage, you’re committed to that payment for 15 – 30 years, on average, unless you sell the condo or pay your mortgage off early.
  • Lack of maintenance costs: When you own a home and your furnace breaks down, you’re on the hook for thousands of dollars in replacement costs. In an apartment, the responsibility of replacing major appliances – and most other maintenance costs – falls on your landlord.

Drawbacks Of Renting An Apartment

While apartment living may save you some money, there is still a price to pay. That includes dealing with some of the drawbacks of renting.

  • No equity: When you own a condo with a mortgage, part of your monthly payment goes toward paying off your loan – helping you build equity in the home. When you rent, your monthly payment goes to your landlord.
  • Lack of privacy: Apartments are attached to one another inside one building. That means you’ll definitely be sharing walls with neighbors and could even have neighbors above and below you. Aside from a lack of privacy, you may have extra noise.
  • Less freedom to customize: Because you likely won’t stay in the same apartment forever, landlords want to keep their apartments in good condition and pretty much move-in ready for the next tenants. To do so, they often have rules on customizing the space, including not allowing paint or holes in the wall.

The Bottom Line

Apartments and condos share some similarities, including amenities and affordability, compared to living in a single home. However, they are distinct from one another. The main difference being that you own a condo and rent an apartment. Owning brings more responsibility and less flexibility but often comes with the freedom to customize your space to truly make it your own. If you’re ready to own, you can finance your condo purchase by starting the mortgage approval process today.

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Lauren Nowacki

Lauren is a Content Editor specializing in personal finance and the mortgage industry. Her writing focuses on reporting the best places to live in the U.S. based on certain interests and lifestyles. She has a B.A. in Communications from Alma College and has worked as a writer and editor for various publications in Philadelphia, Chicago and Metro Detroit.