Row of townhouses in Virginia.

Townhouse: Everything You Need To Know

Victoria Araj7-minute read

April 09, 2021


Finding a place to live is a crucial, sometimes stressful, component of your life. The decision can be time-consuming. From single-family homes to apartments to townhouses, there are plenty of types of houses to choose from. With such a range, it’s even more challenging to find the best place to live based on your needs.

In recent years, townhouses (or townhomes) have steadily grown in popularity due to their low-maintenance appeal. But, even with townhomes’ growing popularity, how do you know if one is right for you? Before you can make an informed decision, it’s important to understand what a townhouse is and what goes into renting or buying one.

What Is A Townhouse?

A townhome is an individually owned dwelling with its own entrance that shares one or two walls with an adjacent property. Residents are responsible for both the exterior and interior of the property. Townhomes usually resemble standalone properties, but they tend to operate like condos, meaning they’re generally a part of a larger governing organization like a homeowners association.

Typically, you can find townhomes lining the streets of suburban and urban areas. If you see a bunch of homes connected on both sides, most likely you’re looking at a row of townhomes. To maximize the square footage of the property, townhomes make the most of vertical space by building out multiple stories.

Townhomes have many benefits that make them excellent options for first-time home buyers. Some of these benefits include:

  • Low maintenance
  • Shared amenities such as pools, tennis courts or clubhouses
  • Affordable housing prices
  • Good locations and access to more expensive communities
  • Strong sense of community
  • Lower renovation costs

However, it’s important to note that because townhomes are managed by homeowners associations (HOAs), the property may come with HOA fees. HOA fees can range from less than $100 per month to over $1,000 per month depending on the type of townhome, amenities and services included. Therefore, when shopping for a townhome, make sure to factor in the HOA fee to your total housing budget.

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Condo Vs. Townhouse

It’s easy to confuse townhomes with condominiums – condos for short. This is because both townhouses and condos are individual units that are owned separately by their residents. But, how do they differ? Townhouses are defined as single-family, multi-floor dwellings that share a wall with another house. Condos are single units within a larger building or community.

Also, condos tend to have higher HOA fees because the residents are only responsible for the interior of their property and the HOA manages everything else. With townhomes, residents may be responsible for the interior and exterior of their homes, making the HOA fees less. Here are a few other differences you may encounter when comparing townhome living to condo living.

Lifestyle Differences

  • Buyers and renters can expect a few lifestyle differences when living in a townhouse or condo. For example, communal spaces and amenities such as a pool, driveways and more are often shared in these communities. Some homeowners associations cover certain amenities in shared spaces such as snow removal, yard upkeep and more.
  • When sharing space with other families, you may notice a difference in privacy. Often, you’ll share an interior wall with the people living next door, so you may hear them from time to time. This is especially different from living in a house, where there is nobody else living under the same roof.

Cost Differences

  • Condo HOA fees tend to be higher than townhome HOA fees. This is because HOA fees associated with condos include things such as insurance for damage to common areas, maintenance for outside walls and the roof of the building, community gates or door access and additional amenities such as a community gym. Townhome HOA fees may also include community amenity costs or maintenance and repairs; however, townhome owners tend to have more financial responsibility for their properties. This makes the HOA fees less.
  • However, when it comes to the purchase price of each property, condos might be less, because you’re not purchasing any land and you’re buying a jointly owned space.

Maintenance Differences

  • There are many differences in maintenance and repair responsibilities between townhouses and condos. For example, the fees and rules can vary significantly between HOAs, so be sure to understand what’s expected of you before moving in.
  • Some HOAs may require maintenance both inside and outside the home to be done by the occupant, whereas others may have specific vendors that they work with on maintenance. Others have remodeling restrictions, landscaping guidelines and more. Take the time to understand these guidelines before moving into a property to ensure that you’re comfortable with what will be asked of you.

Which Is Right For Me?

If you don’t want to worry about the exterior of your property, then condo living might be more suitable accommodations for your lifestyle. You may pay higher HOA fees, but you won’t have to worry about some of the maintenance or repair issues single-family owners must concern themselves with. However, if you want a more affordable alternative to single-family living with some of the same perks, a townhome is a more suitable option. For a third option, you can also consider a co-op.

Townhome FAQs

Now that you understand the appeal of owning a townhome, you may think it’s the right housing option for you. Before you purchase one, let’s look at a few of the most common questions asked by first-time townhouse buyers.

1. Should I Rent Or Buy A Townhouse?

Like deciding whether to buy or rent a home, you must consider the pros and cons of both options when it comes to a townhouse. To help you decide, ask yourself the following questions:

  • What can I afford?
  • How long do I want to stay in this location?
  • Do I want stability or flexibility?
  • Do I have enough money saved for maintenance costs or repairs?
  • What are my financial, career and family goals?

If you know you have limited funds and can’t afford a down payment on a townhome, your best option might be to rent. While you may have to put down a deposit, pay for rental insurance and monthly utility costs such as water and gas, you’ll likely discover renting is more cost-effective. To calculate your potential mortgage costs, you can use the Rocket Mortgage® calculator.

Another factor to consider is if you intend to move within the next few years. If this is a short-term endeavor, you might be better off renting instead of buying. However, if you plan on living in your townhome for years or even decades to come, it may be worth the additional costs to purchase your forever home.

When making this decision, you should compare your goals to the benefits of renting or buying so you can make the intelligent choice that’s suitable for your needs.

2. What Are The Best Areas To Search For A Townhouse?

The best area to search for a townhouse differs by the needs of the person looking for one. These needs include living space, proximity to amenities and the quality of the neighborhood.

For example, a single person who plans to spend a lot of time at work may want to search for a townhome in the city they are working in. They likely will search for one where the HOA covers all lawn care, so they don’t have to take the time to landscape. Proximity to schools isn’t likely important to this individual.

In another example, a family that’s moving to a new city for the first time might be exploring where they want to live long-term while building equity in their first home. They may want to be close to schools and have a small yard or proximity to a playground. This family might not mind a multilevel townhome.

If the buyer’s goal is to build a lot of equity in their home, they will likely also want to understand what the development of the neighborhood will be. For example, if a buyer chooses to purchase in an area that’s growing quickly and attracting a lot of families, their townhome will likely increase in value faster than a home purchased in an older neighborhood that doesn’t have any planned growth.

For more help in finding the right area to live, Rocket Mortgage® recommends working with a real estate agent.

3. Will Sharing A Wall Impede On My Privacy?

Townhome living may not provide as much privacy as living in a single-family home. Townhome dwellers share at least one wall with their neighbors, so it’s not uncommon to hear other people’s movements. This may include hearing the individuals, their garage doors or their music. You may want to tour your townhome at a time when the neighbors are home to see if this will be an issue for you.

4. Do I Have The Same Creative Freedoms As A Single-Family Home?

Townhouse owners may have less creative freedom than in a single-family home due to HOA restrictions and planned living developments. Examples may include:

  • Restrictions on painting the outside of a home. These restrictions may also extend to the interior of a home. Some HOAs will allow you to decorate and paint the interior of a home to your liking, but they may require you to change it back to a certain set of guidelines before selling.
  • Some upgrades will also be restricted by your HOA. For example, some may let you have creative freedom over your door choice or style, but not color.
  • Outdoor decor often is the responsibility of the homeowner, but must still adhere to certain guidelines. Some examples include large flags, the installation or painting of a privacy fence and other aesthetic changes.

5. What Is The Right Type Of Mortgage To Finance My Townhouse?

There are several types of mortgages available to individuals looking to purchase a townhome. While you don’t need a specific mortgage to buy a townhome, often people’s first home purchase is a townhome, and they may require an FHA loan.

Another helpful resource for a first-time home buyer is the HomeReady loan. This loan is designed to help low-income and low-credit score buyers to get approved for a home loan. Many first-time home buyers lack the capital to make a large down payment, and the HomeReady and FHA options allow them to put a smaller total down payment on their home.

If you have a strong credit score but still need a low down payment option, a conventional loan is possible with 3% down. The first step to purchasing a home is often understanding what you can afford.

Get approved to buy a home.

Rocket Mortgage® lets you get to house hunting sooner.

Benefits Of Living In A Townhouse

Overall, a townhouse (or townhome) typically has lower living costs than a house. These homes often come with less need for upkeep due to the HOA. The lower cost to purchase a townhouse also offers the best of both worlds – homeownership without having to purchase and maintain a home and land. Townhomes are a great choice for first-time home buyers.

If you are ready to start your journey to homeownership, you can apply for a mortgage today. Contact Rocket Mortgage® to start your home buying process with numbers you can trust.

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Victoria Araj

Victoria Araj is a Section Editor for Quicken Loans and held roles in mortgage banking, public relations and more in her 15+ years with the company. She holds a bachelor’s degree in journalism with an emphasis in political science from Michigan State University, and a master’s degree in public administration from the University of Michigan.