What to Know About Buying a Townhouse

These single-family houses share a wall with another home, so townhouses may offer less privacy than detached homes. But unlike with a condo, you'll own the land under the unit.

Kate WoodJune 11, 2020
What to Know About Buying a Townhouse-story

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On the spectrum of home types, townhouses fall in between detached single-family homes and condos. Have your heart set on a location, but priced out of its single-family homes? A townhouse may get you into your ideal neighborhood. Want some of the convenience of a condo but not all the rules and regulations? A townhouse could let you split the difference.

These trade-offs may be among the reasons why last year, townhouses — also called townhomes — were the second-most popular home type among buyers, after detached single-family homes, according to 2019 data from the National Association of Realtors.

Here's what to know if you're considering buying a townhouse.

What is a townhouse?

At its most basic level, a townhouse is a multistory home that shares at least one ground-to-roof wall with an adjoining home. But that could describe a few kinds of attached single-family homes, so we'll need to parse it a little more.

Though they're attached, townhouses are self-contained and individually owned. With a side-by-side multifamily home or a duplex, more than one unit shares an entrance, basement or other area. While a development with multiple groups of townhouses may look like a condominium complex, townhouse owners own the land on which their townhomes sit and are often responsible for their homes' exteriors — condo owners only own the interior of their units.

A rowhouse is one type of townhouse, where the individual homes are — as the name implies  — built in a row. They may share the same building material or architectural style, and almost always share the same roofline. In costly cities, these have often been split into rental apartments, but even when they're single-family homes usually all their owners share are walls.

In contrast, townhouses in suburban areas can resemble sprawling condominium developments, with private streets and shared areas like pools and playgrounds. These townhouse developments are also usually run like condo complexes, with townhouse owners paying monthly dues to the development's homeowners association.

Pros and cons of buying a townhouse

Weighing the benefits of owning a townhouse against those of buying a detached house or a condo can help you decide whether a townhome is right for you.

Here are some things to consider:

PROS

  • Townhouses that are closer to city centers or in commuter-friendly suburbs may be more affordable than detached homes in those areas.

  • HOA fees tend to be lower than with condos, since townhouse owners have more individual responsibility for outdoor areas and building exteriors.

  • You'll own a patch of outdoor space, which is especially nice if you're a gardener or a dog owner.

  • It’s typically easier to get a mortgage for a townhouse than for a condo.

CONS

  • If you're in a townhouse community with an HOA, you'll have to abide by its rules.

  • Shared walls give you less privacy than you would likely have in a detached home.

  • Having more independence than you would in a condo also means more responsibility for maintenance.

  • If accessibility is an issue, bear in mind that since townhouses maximize vertical space, one-floor living generally isn't an option.

Once you've decided a townhouse is right for you, zero in on specific townhome developments where you hope to buy. Compare the communities' locations, amenities, HOA fees and rules. A real estate agent who's experienced in working with condo and townhouse buyers can be a major asset in helping you track down these details.

Getting a townhouse loan

Buying a townhouse is very similar to buying a house. Owning the land beneath the townhome, and not just the interior of the unit, makes all the difference — lenders treat townhouses in the same way that they do detached single-family homes. It's a big contrast with buying a condo, which involves a much higher level of vetting; for instance, the lender will usually want to inspect the complex’s finances, not just the home buyer’s.

If you're planning to buy a townhouse that comes with HOA fees, be sure you're including that monthly budget item when you're figuring out how much house you can afford.

But overall, to buy a townhouse you'll go through the same steps as someone buying a detached home: saving up a down payment, comparing lenders, getting preapproved and (finally!) shopping for your new home.

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