What Is A Townhouse? Everything You Need To Know

Finding a place to call home can be challenging. With so many options and so much to consider, you might be struggling to decide what type of abode will work for you and your family. If you’re looking for something a little more affordable than a detached single-family home and don’t mind sharing walls with your neighbors, you may want to consider a townhouse.

A townhouse, also called a townhome, is a type of house that has multiple floors and shares at least one of its walls with other residences. These buildings are often tall, thin and attached to other townhomes in a long row. They’re most popular in urban and suburban areas.

Townhomes can be rented or individually owned, have their own entrances, and may include some outdoor space as well. 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 come with additional fees, which can potentially range between $100 – $1,000 per month.

Despite the potential fees and living in close quarters with neighbors, townhomes remain a popular housing choice for many reasons, from being typically more affordable than detached single-family homes, to their access to amenities such as pools and gyms.

When buying a townhouse, many potential home buyers are curious about what differentiates them from a condominium or a single-family home. Here are some key differences.

Townhouse Vs. Condo

There are a lot of similarities between condominiums, or condos, and townhouses. Like townhouses, condos are often attached via one or two walls to other housing units and are typically governed by an HOA. Additionally, these types of units likely have access to  community amenities.

Unlike townhomes, condos are single units that make up part of a larger complex – meaning condos and apartments could be in the same building. In a complex, you and your downstairs neighbor could have an identical unit, but if you own your space then it is a condominium, if it’s rented, it’s an apartment.

Townhomes are defined as single-family dwellings that happen to share walls with another home (or two), but are considered to be more private than condos. Townhome owners typically enjoy more freedoms as well because a condo’s HOA might rule that the exterior of the unit is entirely out of the homeowner’s control, whereas townhouse owners may have the freedom to do whatever they would like with the exterior of their space. Furthermore, where a condominium complex might handle all yard maintenance, townhouse HOAs might require that occupants take care of outdoor tasks themselves.

Townhouse Vs. Single-Family Home

A townhouse and a single-family home are considered single-family dwellings, and owners are typically expected to take care of their own maintenance tasks, indoor and outdoor. A townhouse is a combination of both a single-family home and a condo, so it’s a happy medium for certain people in the housing 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 various responsibilities, like shoveling a driveway or tending to the landscape. Again, this is not the case for every HOA, as some may require you to take care of landscaping on your own. However, this would still be less of a hassle than maintaining a detached single-family home because townhouses have less yard space.

Furthermore, single-family homes may be in more rural locations than a townhouse. Townhomes are often found in urban or suburban areas and tend to be newer and more recently updated than single-family homes.

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

Like any other home, the cost to buy a townhouse will vary depending on several factors, including location, size and amenities. Also remember that townhouses typically have HOAs, which can cost an extra monthly fee.

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

Should you live in a townhouse? These pros and cons can help you decide.

Pros

• Accessibility to various amenities: Similar to an apartment or condo, townhouses often have access to community or homeowners’ association amenities, which might include things like parks, pools and community gyms.
  
  
• Ability to change the interior and exterior: Townhomes are like a blend of condos and detached single-family homes. Usually, unless an HOA rules otherwise, you have the freedom to change anything you want, interior or exterior, about your home.
  
  
• More affordable for first-time home buyers: Townhomes tend to be more affordable than single-family homes since they’re attached and often lack the yard space that those with detached homes tend to pay for. If you don’t mind sharing walls with neighbors, you can potentially get more space for your money this way.
  
  
• Less work to maintain: Since they often lack large yards and are typically attached at the sides to other units, townhouses may require much less external upkeep than other homes. If your townhome is part of an HOA, you may not have to do any external upkeep at all.

Cons 

• Lack of privacy: Since townhomes share walls with the residences next to them, you will have to sacrifice a little privacy to live in one. When you live in close quarters, loud neighbors might become an issue.
  
  
• HOA fees and restrictions: While not every townhouse is part of an HOA or subject to regular HOA fees, many are – which can be a downside for potential home buyers that don’t like the idea of being restricted by an HOA.
  
  
• Resale value: In some areas, townhomes might sell for less than single-family homes or to a smaller pool of potential buyers. Before you buy a townhouse, you may want to look into the market where you live to help determine whether it would be a worthwhile investment for you in the long run.
  
  
• Smaller living space: While townhouses typically have multiple floors, they’re usually not very large in terms of square footage. Additionally, living in a home split among multiple floors can become a problem in terms of mobility and accessibility, especially for older home buyers.

Below are answers to a few common questions and concerns you might have.

Should I rent or buy a townhouse?

If you’re debating on renting or buying a townhouse, consider all the pros and cons as you would if you were purchasing a traditional home. Consider what you can afford, how big of a down payment you can make, how long you want to live there and whether you can afford to take care of potential maintenance concerns yourself. Whether you decide to rent or own is ultimately decided by your housing needs. Purchasing any type of home is a much larger commitment than renting, so assess your needs carefully.  

What are the best areas for a townhouse?

The best area to buy a townhouse depends on the person. Consider your own needs in a home – do you want to be close to lively areas of the city or would you rather live in a quieter, more family-oriented neighborhood?

Consider that HOAs are different depending on the area, so be sure to ask questions before making such a large purchase. For instance, do you want to live somewhere that your lawn will always be taken care of for you? Never assume, clearly ask the HOA about any rules and regulations in place.

Consider the growth of an area as well. If a neighborhood is quickly expanding, you may be able to build equity faster, meaning you can potentially sell your home sooner or for more money than someone who lives in an older neighborhood with no new development.

For help deciding what neighborhood to live in, Rocket Mortgage recommends working with a knowledgeable real estate agent or REALTOR^®.

What type of mortgage do I need to finance a townhouse?

There are multiple types of mortgages available to potential townhouse buyers. In fact, financing a townhome is essentially the same as financing a detached single-family home. Unlike getting financing for a condo, where there might be concerns or restrictions regarding the condo development, getting a mortgage for a townhome is pretty straightforward.

If you’re a first-time home buyer, you may want to consider an FHA loan, which has looser financial requirements than some other mortgages and can be more accommodating for aspiring buyers trying to get their foot in the door to homeownership. HomeReady and Home Possible loans available through Fannie Mae and Freddie Mac respectively may also be good options for first-time home buyers or those that may not have perfect credit.

If you have solid credit, conventional loans are always an option, too, and often do not require large down payments. In fact, some conventional loans require as little as 3% down.

A townhouse is a unique type of home that offers many of the benefits of both condo and single-family home living. This type of home is perfect for potential buyers that want more freedom than a condo but maybe not all the upkeep responsibilities that come with buying a detached single-family home.

Before buying a home, it’s important to consider all your housing needs and do your research to decide what will work best for you. It’s always a good idea to consult a real estate agent if you are unsure a townhome is the right choice for you.

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