What Iis a townhouse? Everything you need to know

If you’re on the journey to homeownership, you’ll likely have at least a few housing options to choose from – and one of those options is a townhouse. A townhouse, or townhome, can be more affordable than a detached single-family home. If you don’t mind neighbors being on the other side of a wall or multiple walls, a townhouse could be the right choice for you and your situation.

Find out exactly what a townhouse is, how it compares to other types of homes, and the pros and cons of buying a townhome.

What is a townhouse?

A townhouse features multiple floors with at least one shared wall between residences. These buildings are often tall and thin and attached to other townhomes in a long row. Townhouses, which are most popular in urban and suburban areas, sometimes have a small front lawn, side lawn and/or backyard.

Townhomes can be rented or individually owned, and they have their own entrance and may include some outdoor space. This type of home may also be part of a homeowners association (HOA) – a private organization that oversees the management of some residential communities. Complexes with an HOA usually have additional fees of usually around a couple hundred dollars a month.

Despite the potential fees and living in close quarters with neighbors, townhomes remain a popular housing choice, especially among first-time home buyers, couples, families and single adults. Townhomes are typically more affordable than detached single-family homes, and financing a townhouse works basically the same as financing a single-family home. Townhouse owners may also have access to amenities such as clubhouses, swimming pools, fitness centers and other common areas.

If you’re thinking of buying a townhouse, you might be curious about what differentiates a townhouse from a row home, apartment, condominium or detached single-family home.

Differences between townhouses, row homes, condos, apartments and single-family homes

Townhouse vs. row house

Townhomes are sometimes referred to as “row houses” or “row homes,” but townhomes and row houses or row homes are actually different. The term “rowhouse” implies the structure is identical to that of its neighbors, while townhomes can vary in design within the same townhouse complex.

Row houses are also more likely to be urban residences, whereas townhomes are often in the suburbs. Row homes are typically built in long rows that may line an entire street or block. Townhomes can also be built in rows, but they’re more likely to be divided into smaller sections or groupings.

Townhouse vs. apartment

Townhouses also share key features with apartments. Both housing options are considered individual dwellings that are located within a larger complex. Apartment buildings and townhouse complexes also often provide residents with shared spaces and amenities, such as a gym or outdoor area.

An apartment is different from a townhouse in that apartments are usually rented to tenants. Renters typically don’t have the option to buy their own apartment. Townhomes, on the other hand, can be purchased like any other type of house.

Apartments are also maintained by a landlord or property manager, whereas the owner of a townhouse is in charge of the maintenance and repairs. Townhouse owners are also responsible for abiding by any HOA guidelines.

Townhouse vs. condo

Condominiums (or condos) and townhouses have a number of similarities. Like townhouses, condos are often attached via one or two walls to other housing units and are typically governed by a condo association similar to an HOA. Additionally, these types of units likely have access to community amenities.

Unlike a townhome, a condo is a single unit that makes up a larger complex. This means condo owners are more likely to have neighbors above or below their unit. On the other hand, townhomes are defined as single-family dwellings that happen to share walls with another home (or two homes) but are considered more private than condos.

Townhome owners typically enjoy more freedoms as well. While a condo association may rule that the exterior of a unit is entirely out of an owner’s control, townhouse owners may be able to do as they please with the exterior of their space. On the flip side, where a condominium complex may handle all yard maintenance, townhouse HOAs may require that owners take care of outdoor tasks themselves.

Townhouse vs. detached single-family home

A townhouse and a single-family home are considered single-family dwellings, and owners are typically expected to handle maintenance indoors and outdoors. A townhouse is a combination of a single-family home and a condo, so it’s a happy medium for some people in the real estate market.

Townhouse owners may be responsible for less maintenance and upkeep than single-family homeowners. Not every townhouse is part of an HOA, but many are – and some HOAs take care of responsibilities such as snow removal or tending to the landscaping. Owning a townhouse can be a savvy option for someone who wants the convenience of a single-family home without the responsibility of ongoing maintenance.

Townhomes work well for those eager to live near the city and willing to sacrifice space and privacy. On the other hand, single-family homes may appeal to home buyers who appreciate a little more space between themselves and their neighbors.

Pros and cons of buying a townhouse

Townhouses come with both advantages and disadvantages that can help you determine whether townhouse living is right for you.

Advantages of townhomes

Townhome owners enjoy benefits such as:

• Accessibility to various amenities: Townhouses often have access to community spaces or amenities connected to a homeowners association, which may include parks, pools and community gyms.
• Renovation potential: Unless the HOA rules say otherwise, owners have the freedom to change anything in the interior or exterior of their home.
• Affordability: Townhomes tend to be more affordable than single-family homes since they’re attached and often lack the yard space that detached homes tend to include. This layout can potentially get you more interior space for your money.
• Less maintenance: Since they often lack a large yard and are attached at the sides to other units, townhouses may require much less exterior upkeep than other homes. If your townhome is part of an HOA, you may not have to do any exterior maintenance.

Disadvantages of townhomes

Among the drawbacks that buying a townhouse can include are:

• Less privacy: Since townhomes share walls with the residences next to them, you’ll sacrifice a little privacy to live in one. When you live in close quarters, loud neighbors may become an issue.
• HOA fees and restrictions: Many townhouse communities are part of an HOA or subject to HOA fees. This can be a downside for potential home buyers who don’t like the idea of being regulated, so it’s important that you’re comfortable with all HOA rules.
• Potentially diminished resale value: In some areas, townhomes may sell for less than single-family homes or to a smaller pool of potential buyers. Before buying a townhouse, you may want to examine the real estate market where you live to help determine if it’s a worthwhile investment.
• Not as much living space: While townhouses typically have multiple floors, they’re usually not very large in terms of square footage. Living in a multilevel home can also present mobility and accessibility issues, especially for older home buyers.

How to buy a townhouse: 5 helpful steps

The process of buying a townhome is similar to the process involved with purchasing a traditional house, but you’ll want to consider taking some additional steps.

1. Calculate your housing budget

As with any other home, the cost to buy a townhouse will vary depending on several factors. These include location, size and amenities. Keep in mind that townhouses are typically managed by a homeowners association, which can mean paying an extra monthly fee.

Before you start looking for a home, figure out how much you want to spend on the total purchase price and monthly mortgage payment. Don’t forget to factor in certain expenses, such as your down payment and closing costs.

For help calculating your potential mortgage payment, use the mortgage calculator from Rocket Mortgage^®.

2. Determine where you want to live

Once you have your housing budget, you can use this amount to determine where you can afford to live. Townhomes are typically located in suburban and urban areas, so the cost of living may be higher than in rural areas.

You should also use this step to determine whether you want to live in a townhome community connected to an HOA. Some buyers may choose to forgo this type of townhouse lifestyle for more freedom and fewer monthly fees.

It may be wise to speak with current residents about what they like and don’t like about the HOA community, townhouse amenities and the neighborhood. This will provide you with a better picture of how life in the community would be if you moved there.

3. Find a mortgage lender

Before making an offer on a townhouse, you should consider getting preapproved for a mortgage. An approval letter from a mortgage lender can help cement your house budget and show sellers you have the financial means to complete the transaction.

You can also compare several types of mortgages to find the best home loan for your needs. For example, if you’re a first-time home buyer, you may want to consider an FHA loan, which comes with less stringent financial requirements than some other mortgages.

If you have a solid credit score, a conventional loan may be a good option. Conventional mortgage loans may require a down payment that’s as little as 3% of the purchase price. You’ll need to make a down payment of at least 20% to avoid paying private mortgage insurance (PMI), though.

4. Make an offer on the townhouse

With a mortgage approval letter in hand, you can finally start touring townhomes in the neighborhoods that interest you. Keep in mind that amenities vary by community. Make sure to compare the costs and benefits of each property before making a home purchase offer.

5. Close on the townhome

Once a seller has accepted your offer, the townhome will need to be appraised – and if you included a home inspection contingency in your purchase agreement – the house will be inspected.

Meanwhile, it’s best to stay in contact with your lender and quickly answer any questions the mortgage underwriter may have. From there, as long as all goes according to plan, your lender will issue you a final mortgage approval so you can close on your new home.

The bottom line: A townhome won’t suit everyone, but it might suit you

A townhouse is a unique type of home that offers many of the benefits of condos and single-family home living. A townhome is often a good compromise for potential buyers who want more freedom than they would have with a condo but don't want to deal with the upkeep that a detached single-family house requires.

Before buying a home, it's important to consider all your housing needs and decide what will work best for you. It's always smart to consult a real estate agent if you're unsure whether a townhome is your most suitable option.

Ready to buy a home? Get started online today with Rocket Mortgage.