What Is A Townhouse? (2023)

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It’s important to review all of your options if you’re looking to buy a home. This includes reviewing different types of homes, such as townhouses. While these kinds of houses are similar to traditional homes, they can offer some standout features, such as access to community amenities.

If you’re wondering what a townhouse is and whether it’s a good choice for you, here’s what you should know.

What Is a Townhouse?

A townhouse (also called a townhome) is generally one unit with at least two floors in a row of many that shares either one or two walls with another unit next to it. It can also share other features like yards and amenities, though it typically comes with its own entrance. This type of home is usually smaller than traditional single-family homes, too.

While standalone homes can sit close to one another, note that a house isn’t considered a townhouse unless it sits side by side with another unit. Additionally, though a townhouse sits in a row of attached units, each unit is individually owned, and it might be part of a homeowners association (HOA).

What Is the Difference Between a Condo and a Townhouse?

While condos and townhouses are usually owned individually, a condo is more like an apartment. Condos are located in a building with other condominiums above and below them, often within complexes that contain several of these buildings—sometimes within a gated community.

However, unlike an apartment, a condo is owned like a standalone home or townhouse and can be sold or rented by the homeowner. An apartment, on the other hand, is owned by a landlord who generally owns all of the units within a complex and leases them to individual renters.

Condos also tend to be smaller than townhouses, though they typically provide more shared amenities like fitness centers or swimming pools.

How Much Does a Townhouse Cost?

While townhouses are generally less expensive than single-family homes, that doesn’t mean they’re cheap. For example, you could end up paying more for a townhouse in Brooklyn than a single-family home in Dallas.

Ultimately, how much a townhouse will cost will depend on a wide variety of factors including:

  • Location (both city and housing development)
  • Size
  • Market demand
  • HOA costs (if applicable)
  • Financing options
  • Included amenities

Also keep in mind that your costs will vary depending on if you choose to buy or build a townhouse.

Pros and Cons of Buying a Townhouse

Like with other types of real estate, buying a townhouse comes with its ups and downs. Here are some pros and cons to keep in mind as you weigh your options:

Pros of Buying a Townhouse

  • Can be less expensive than a traditional home. A townhouse is typically less expensive than a standalone single-family home, though this will ultimately depend on location, market demand and amenities.
  • Eligible for mortgage financing. If you need financing to purchase a townhouse, you’ll go through the same steps and can choose from mostly the same types of home loans as you would if you were buying a standalone home. For example, you could consider a conventional mortgage or a loan backed by the Federal Housing Administration (FHA), U.S. Department of Agriculture (USDA) or Department of Veterans Affairs (VA).
  • Amenities usually included. Depending on where you look, many townhomes provide a variety of amenities. For example, a property might come with access to a clubhouse, pool and exterior maintenance.

Cons of Buying a Townhouse

  • Might be part of an HOA. If you opt to buy a townhome that’s part of an HOA, you’ll need to follow association guidelines when it comes to the exterior of your home. You’ll also have to pay HOA fees that go toward the upkeep of the community, which can range from $100 to $1,000 or more per month.
  • Less privacy. Detached, single-family homes—even if they’re close together—are separated by individual walls. Townhouses, on the other hand, are joined by at least one wall for corner units and two walls for the ones in between. This means your neighbors will have closer access to your life (and vice versa), whether you like it or not.
  • Less accessible. Townhouses are multi-level buildings with at least two stories. If you need more accessible housing without stairs, you’ll want to consider other options.

How to Buy a Townhouse

If you want to buy a townhouse, follow these steps:

1. Review Your Budget

Like with buying any kind of home, you’ll want to check your budget first if you’re thinking of purchasing a townhouse. While townhomes tend to be less expensive than standalone structures, you’ll still likely need to take out a mortgage to finance one. As such, you’ll have to make sure that you’ll be able to reasonably afford the monthly payments as well as additional expenses like homeowners insurance or HOA fees without overextending yourself.

You can use our home affordability calculator to estimate your payments and get an idea of what you can manage financially.

2. Decide What You Want

While your budget will be your financial guide, it’s also important to think about your “must haves” when shopping for a townhome. Here are some questions to help you brainstorm:

  • Do you want to live in a gated community?
  • Do you want control over your lawn maintenance or other home needs?
  • Do you prefer having your own personal pool or a community pool?
  • How many cars do you have, and do you need multiple parking spots?
  • Do you have limited accessibility that prohibits you or your family from traversing stairs?
  • Is being part of an HOA a problem?
  • Are you okay with sharing walls with your neighbors?

While this isn’t an exhaustive list, answering these questions can help you decide which type of home is right for you.

3. Compare Lenders and Get Preapproved

It’s better to find a home based on how much home you can afford instead of falling in love with a home you can’t afford. So if you need a mortgage to finance a townhouse, it’s a good idea to start shopping around and comparing your options from multiple mortgage lenders early on in the process. Consider prequalifying with several lenders to see what loan amounts you could potentially get approved for and to narrow down your choices.

Later, when you’ve found a townhouse you want to make an offer on, you might want to consider applying for preapproval with your chosen lender. To do this, you’ll need to provide financial documentation and undergo a hard credit check. If you’re approved, you’ll receive a preapproval letter with the loan amount you qualify for. Sellers often prefer seeing a preapproval letter when it comes to getting offers, so having one in hand can help fast-track the process.

4. Explore the Neighborhood

It’s easy to fall in love with a space when you take a tour on a quiet afternoon. But you’ll want to get a more comprehensive look at the living space and neighborhood before making any decisions. For example, consider potential noise from shared walls, and explore common areas like a gym or pool.

You might also find it helpful to walk around the neighborhood and chat with your potential neighbors. Ask what they like and don’t like. See if it’s a place you can picture yourself living.

5. Make an Offer and Close on the Townhouse

After you’ve found the right townhouse for your needs, make an offer (with the help of your real estate agent, if you have one). If the seller accepts, you’ll need to get final approval from your lender, which might involve providing additional paperwork.

Once everything is in place, you can then proceed with closing on your new home. Be prepared to review your closing disclosure, pay your closing costs and get all keys and copies of paperwork that you need.

Is a Townhouse Right for You?

Whether a townhouse is right for you will depend on your unique circumstances and preferences. Buying a townhome can be a good move for first-time homebuyers or those looking to save money. But if you need more space or don’t want to share walls with your neighbors, you might want to consider other options.

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Author: Aron Pacocha

Last Updated: 01/19/2023

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