The words “condo” and “townhome” are often used interchangeably, if not carelessly. That’s a problem because in the mortgage realm, condos and townhomes have distinct differences that can change the course of your real estate fate.
If you are hunting for a condo, townhome or another type of multifamily housing, keep in mind that everything is not as it seems. If the listing says it’s a condo, is it truly a condo? What makes a condo and a townhome different, besides their outer appearances?
If you’re starting to worry, stop! MortgageDepot is here to explain the legal differences between condos and townhouses so that you can make an informed decision while you’re on the lookout for your next home.
Condos possess a certain appeal to buyers. Low-maintenance living, desired amenities and convenient locations are only a few of the pros that our condo-loving clients mention.
What else do you need to know about condos? Here is a list of condo characteristics to keep in mind:
- Condos can be attached or detached, although they typically share at least one wall with a neighbor.
- Condo owners only own the space within their walls.
- Since condo residents don’t own anything on the exterior, HOA dues tend to be on the steep side to cover maintenance of these common areas.
- Two deeds exist for a condo: one for the entire development and one for the individual unit in question.
Townhomes usually offer some degree of low-maintenance living with a more “homelike” appearance. Here are a few traits that set townhomes apart from the crowd:
- Like condos, townhomes can be attached or detached.
- Townhome residents own the entire unit, including the walls, roof and yard.
- Since townhome residents own parts of the unit’s exterior, they are responsible for maintaining these aspects. This might make their HOA dues lower compared to condominiums.
- Townhomes only have one deed, which includes the unit and associated land.
Condos, Townhomes and the FHA
If you are thinking of buying a condo and planning to go the FHA route for a mortgage, here’s something you need to know: To purchase a condo with an FHA mortgage, that condo must be FHA approved. Townhomes do not require this approval.
Are you wondering if the condo you have your eye on is FHA approved? Check out HUD’s FHA-Approved Condo List online. It’s easy to use and might save you an unpleasant surprise later in your home search.
MortgageDepot Can Help!
Don’t rely on a real estate listing to tell you if a particular home is a condo, townhome or something else. Eliminate the confusion and contact MortgageDepot today!
Connect with one of our loan consultants to learn more.