How to Buy a Condo or Townhouse

How Are They Different from Single-Family Homes?

Buying a condo or townhouse is different than buying a single-family house. Mortgage lenders often have different requirements for these homes, especially for condominiums. Condos and townhomes usually come with community rules you will need to follow and homeowner association (HOA) fees you will need to pay.

What Is a Condo?

A condo is an apartment you own inside a building that has other units. Condo owners are part of an association that manages the maintenance and repairs of the building and common areas, such as the lobby, laundry, social room, and parking. The association typically manages the exterior property, too, including maintenance and landscaping.

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What Is a Townhouse?

A townhouse is a separate home that shares a wall or walls with other townhomes in the community. They are like single-family homes in that they have their own entrances, may have front and back yards, and may have a separate garage, too.

Like condominiums, townhomes often have homeowners associations and association fees. These fees can cover the exterior maintenance of the home and the maintenance of roads, sidewalks, landscaping, and shared facilities, like clubhouses and pools.

Townhouse communities can also have rules that limit what you can do with your home in ways you aren’t typically limited to when you own a single-family home. There may be limits to the renovations or additions you can make to your home, such as the colors you can paint the exterior of your home. Before you buy a home that belongs to a homeowners association, understand the fees and rules that come with it.

How Is Buying a Condo Different from Buying a House?

Lenders often have more requirements for approving a mortgage to buy a condominium, compared to a single-family home. Lenders usually look at the financial health of the condo association, including owner-occupancy rates, vacancy rates, or units where owners are late on HOA fees. They may also consider how much money the community has for maintenance and how much communal or commercial space is used.

Lenders typically consider the age, structure, and condition of the building. They may be less willing to approve loans for condos in buildings that have significant repair or maintenance needs.

Fannie Mae and Freddie Mac have established standards that condominium buildings need to meet for units in that building to be eligible for purchase with a Conventional loan.

For FHA and VA loans, the property typically needs to be part of a condominium building that is already approved by the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA).

You can check whether a condominium is eligible for purchase with a VA loan by creating a VA Loan Guaranty account.

You can check whether a condominium is eligible for purchase with an FHA loan by searching this FHA loan database.

Are Mortgage Rates Higher for Condominiums than Houses?

Yes. Since lenders often consider mortgages for condominiums riskier than loans for single-family homes, they may charge higher interest rates, require larger down payments, or have other financial requirements you will need to meet.

How Is Buying a Townhouse Different than Buying a House?

Lenders often have similar requirements for townhouses and single-family homes. That is because the value of a townhouse is less dependent on the value of adjacent townhomes and because you are also buying the land on which the home is built.

Lenders may still look at the financial health of townhouse associations and the value of property that's shared by homeowners before they approve a mortgage. Some townhouses can be considered condominiums, and lenders may have different requirements for approving your mortgage application as a result.

Are Condos and Townhouses Less Expensive than Houses?

Yes, condominiums and townhomes are often less expensive than single-family houses, making them a good choice for first-time homebuyers or homeowners thinking about downsizing. Keep in mind that condos and townhouses usually come with HOA fees, which you will want to include in your estimates of the total monthly costs of owning the home.

Is Buying a Condo or Townhouse a Good Choice for You?

Cost and mortgage options are two important considerations when you are buying a condo or townhouse, but they aren’t the only ones!

• Think about lifestyle. Living in a condo is like living in an apartment. If being too close to your neighbors is unappealing, a townhouse can give you more space and privacy.
• Look at amenities. Condo and townhouse communities can offer gyms, pools, and other perks or they may only provide basic upkeep. Decide what level of amenities you want and how much you are willing to pay for them.
• Research the community association. How well the condo or townhouse association is run can have a big impact on how happy you are with your home. Are grounds and property well maintained and are repairs done quickly? Does the association have enough money for upkeep? Make sure the community has a good reputation, and that its homeowners are satisfied before you decide to buy.
• Know the community rules. Condo or townhouse associations have rules that may affect your choices about your home’s exterior style, landscaping, and decoration. There are often rules about the number and types of vehicles you can park at home. It is also common to have regulations that limit whether you are allowed to rent the property. Other rules can affect pets, noise, trash, the use of shared amenities, and the kinds of possessions you can store outside your condo or townhouse. The rules should explain how these standards will be enforced, as well as the penalties for violations. These rules are often called restrictive covenants.

Last reviewed and updated October 2025 by Freedom Mortgage.