Condo Vs. Apartment: A Guide

Apr 21, 2024

7-minute read

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An orange and white apartment building, representing urban or multi-unit living spaces.

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