What You Need To Know About Buying a Townhouse

If you’re in the market for a new home and haven’t found what you’re looking for—or what you’re looking for is out of your price range—then a townhouse might be worth considering. Townhouses are a budget-friendly alternative to detached homes, making them more accessible to many homeowners.

Like most things, they come with some downsides that could make them an unattractive choice for some buyers. Learn more about how townhouses differ from other types of homes, the pros and cons of townhouses, and whether a townhouse is right for you.

What Is a Townhouse?

A townhouse is a multi-story home that shares one or more walls with another unit. According to the U.S. Census Bureau’s definition, most townhouses are considered single-family homes as long as they are separated by a ground-to-roof wall, don’t have separate units above or below them, and have separate heating/cooling systems and utilities.

Townhouse vs. Other Types of Homes

Townhouses have some similarities with both detached single-family homes and condominiums, but there are also some key differences that make townhouses unique.

Townhouses vs. Condos

While townhouses and condos are often considered similar housing, they have several key differences.

First, to meet the definition of a townhouse, a structure must have a ground-to-roof wall separating units and there can't be units built on top of one another. With condos, it's not unusual to find structures built similarly to apartment buildings or hotels, where units are stacked both side by side and on top of one another.

Another major difference between townhouses and condos is what the owner actually owns and is responsible for. In the case of condos, the owner generally owns only what’s inside of their unit. As a result, they have little control over the exterior of the building and aren’t responsible for maintaining it.

Townhouse owners, on the other hand, own the entire unit, which includes the exterior of the property, and may also include a yard. As a result, the townhouse owner has more control over the home’s exterior. By the same token, they also have more responsibilities when it comes to maintenance.

Despite their differences, condos and townhouses have some key similarities. First, both are typically a part of a homeowners association (HOA), where owners are required to pay dues. In exchange for their dues, the organization offers community spaces, amenities, and property maintenance, which the dues help pay for.

Townhouses vs. Detached Single-Family Homes

Both townhouses and detached homes are considered single-family homes by the U.S. Census Bureau’s definition. The key difference between them comes down to whether there are units attached to one another.

In the case of a townhouse, each unit is attached to at least one other, and many are attached to units on both sides. But in the case of a detached home, they are fully separate from all of their neighbors.

Additionally, townhouses are usually a part of HOAs. And while it’s true that many detached homes can be parts of an HOA, it’s not quite as standard as it is for townhouses.

Just as there are some differences between townhouses and detached homes, there’s also an important similarity. With both of these structures, the owner has full ownership of the entire unit, both inside and outside. The benefit is that they have control of what they do with their home’s exterior (subject to HOA regulations). And if the property comes with a yard, they get to enjoy it. On the other hand, having control of the property’s exterior also means owners are required to maintain that space, whether that means mowing the lawn, shoveling snow, and more.

Pros and Cons of Buying a Townhouse

Pros Explained

• More affordable than detached homes: In general, townhouses are more affordable than detached single-family homes. Part of the reduced cost stems from the fact that a home that shares a wall with neighbors may be less desirable to some buyers. However, townhouses also come with a smaller space, especially regarding the home’s exterior.
• Amenities provided by an HOA: Townhouses are usually parts of HOAs that provide amenities that may include community spaces such as parks and pools, as well as maintenance of community spaces.
• Less maintenance than a detached home: Townhouses generally have less exterior space than detached homes, partially due to the fact that they’re attached to at least one other unit and, in many cases, two other units. As a result, these homes may also require less maintenance.
• More control than a condo: When you own a condo, you only own and have control of what’s inside your unit. But with a townhouse, you have control of both the interior and exterior of your property, giving you more control.

Cons Explained

• Subject to HOA fees and restrictions: Just like condos (and some detached homes), townhouses are usually a part of HOAs. This may be a pro for many townhouse owners; however, it also requires an added cost and may leave an owner subject to strict HOA rules.
• Less privacy than a detached home: When you’re sharing a wall with your neighbors, you’re going to have less privacy than if you had a detached home. You’ll be closer to your neighbors and may struggle with more noise pollution, especially if there are thin walls separating the units. Additionally, while you do have your own exterior space, there may be little actual separation between your space and your neighbor’s.

How To Buy a Townhouse

The process of buying a townhouse isn’t all that different from buying a detached home. When it comes to financing, you can either choose to pay in cash or—as most buyers do—finance your purchase. The good news is the financing options for a townhouse are the same as a detached home, including conventional loans, FHA loans, and VA loans.

Just as with any other home purchase, it’s important to make sure your finances are in good shape before you take the next step. You’ll have to meet the lending requirements for your loan as it relates to your credit score, the size of your down payment, and your debt-to-income ratio.

Buying a townhouse is also similar to buying a detached home when it comes to what the process looks like. Start your buying journey by hiring a real estate agent who can serve as your guide.

Is a Townhouse Right for You?

Anytime you’re considering buying a home, it’s important to think critically about what will best meet your needs, and a townhouse is no exception. A townhouse can be a great option for someone who wants the financial and emotional benefits of homeownership, but who either can’t afford a detached home in their area or doesn’t want to be responsible for required maintenance.

In many ways, a townhouse offers all the benefits of a condo, but with more privacy. You’ll have an HOA that may provide a variety of amenities and maintenance, which can make the HOA dues well worth the cost. And unlike a condo, you’ll have ownership over your home’s exterior.

That said, a townhouse simply isn’t what many people envision when they think of homeownership. If you dream of owning a detached home with a big yard or space for your family to grow, then a townhouse may not work for you.

When you’re buying a home—whether or not you’ve considered a townhouse—sit down and make a list of your must-haves. Depending on your list, you may immediately know whether a townhouse will work.

Frequently Asked Questions (FAQs)

Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!