Townhouses offer many advantages and are eligible for standard mortgage financing.

Townhouses are often less expensive than stand-alone single family houses, making them attractive to many homebuyers, including first-time buyers. Here’s a brief overview of townhouse pros and cons and what you need to know about buying one.

What’s a townhouse?

A typical townhouse, (also called a townhome) is a two-story residence that shares one or more walls with adjacent units. They’re often built in groups of multi-home buildings, and many have garages.

A townhome is like a condo in that property owners share responsibility for certain common elements, such as roofs. It’s like a detached single-family home in that homeowners usually have a small yard in the front and/or back.

A townhouse differs from a condo significantly because a townhouse owner owns the interior and exterior of the home, as well as the land, and they are responsible for the upkeep of these elements.

Like many condos and detached homes, townhomes usually have HOAs that maintain common areas. HOA fees are usually less for townhomes because homeowners, not the association, are responsible for building exteriors. However, if the townhouse community has amenities like a pool, clubhouse or gated entry, HOA costs could be higher.

Some pros and cons of townhouse

One reason townhouses appeal to many people is location. Often they are in well-developed areas with easy access to stores, restaurants and other services. Another reason people opt for townhouses is that they provide more indoor and outdoor space than an apartment or condominium at a lower cost—including lower property taxes—than a detached home.

Depending on your preferences, the density of homes and corresponding increase in the number of nearby neighbors may be a pro or a con. Many folks enjoy the community aspect of a townhouse community while others prefer more privacy and don’t like the idea of shared walls.

A con of living in a townhouse community is that there will be rules and regulations that may feel restrictive. For example, the appearance of the townhome’s exterior and what kind of landscaping is allowed are commonly addressed by townhome rules. Also, the HOA setting the rules, regulations and maintaining common areas will require monthly dues.

Buying a townhome

The process of buying a townhouse is like buying a single family home. You make an offer to the seller and if they accept you proceed with your due diligence—including a home inspection—and the closing of the sale. If you plan to finance the purchase we recommend getting pre-approved for a home loan to help make a stronger offer.

Before completing the sale, part of your due diligence is to review the rules governing the townhome community as well as the HOA’s financial statement and the level of reserve funds. Reserve funds are what’s set aside for unplanned expenses (for example, storm damage) or significant planned expenditures (such as paving parking areas or roof replacements).

Getting a mortgage for a townhome is simpler and costs less than financing a condo. With a condo, a lender accepts higher risk and charges slightly higher interest because the homeowner only controls their unit; the condo association controls the rest of the building and grounds. A townhome, although it shares a wall with one or more residences, poses less risk to lenders because the homeowner owns the structure and land.

Mortgage loans for townhomes are available in flexible options. Talk to one of our Mortgage Loan Officers to get the loan that will help you get the home you want.

 

All loans subject to approval. Rates, terms, and conditions are subject to change and may vary based on credit worthiness, qualifications, and collateral conditions. Federally Insured by NCUA