Townhome vs. condo: Which is the smarter starter home?

Standalone, single-family homes still dominate the market for startup homes across the nation.

But a growing number of first-time buyers are investing in townhomes and condos, especially in markets where prices are out of reach.

What's the difference between a townhome and a condo, and should you consider either of these property types?

What's the difference between a townhome and a condo?

Realtors and other property experts can point to specific differences between townhomes and condos.

Townhome owners may have neighbors on either side but not upstairs or downstairs neighbors, for example, while condo owners share common entrances and depend on elevators for easy access.

But the real difference between these two property types comes down to what you, the homeowner, actually own.

• With a condo, you own the interior of your unit: floors, appliances, fixtures. Everything outside your unit's walls — the roof, the hallways, the parking lot, the landscaping — belongs to the condo association, and every owner pays into shared costs to maintain it.
• A townhouse, on the other hand, usually comes with more of what a single-family home offers. You typically own the structure itself, including the roof and exterior walls, plus a small footprint of land underneath and sometimes a tiny yard or patio.

With either property, you'll likely find yourself under the same roof with other homeowners, and you'll pay into a HOA that maintains common areas.

But the differences between townhomes and condos can affect the cost, including financing options.

Cost comparison: price, HOA fees, and hidden costs

On paper, condos often look cheaper. But the full picture is more nuanced. Nationally, the median condo and co-op price is sometimes higher than the median single-family price.

The average price is higher not because condos cost more unit-for-unit, but because they're concentrated in expensive coastal and urban markets. Within any single local market, a condo will typically undercut a comparable single-family home or townhome on price.

Where the math shifts is in monthly costs beyond principal and interest:

• HOA or condo association fees: Condo association fees are usually higher than townhome HOA dues, since they're covering building-wide costs like roofing, elevators, and shared utilities.
• Special assessments: If a condo building needs a new roof or the reserve fund is underfunded, owners can be hit with a one-time special assessment bill, sometimes for thousands of dollars.
• Insurance: Condo owners typically need a smaller "walls-in" policy since the association insures the building; townhome owners usually need broader coverage similar to a single-family policy.

A mortgage calculator can help you see how HOA dues and insurance stack on top of principal and interest so you're comparing total monthly cost, not just sticker price.

...in as little as 3 minutes – no credit impact

Financing differences: how townhomes and condos qualify

This is where the two paths diverge most for first-time buyers.

About condo loans

Because a condo loan is really a loan against a small piece of a much larger asset, lenders have to evaluate the health of the entire building and not just your personal finances.

This broader scrutiny extends to the condo association's budget, reserve funds, owner-occupancy ratio, and any pending litigation. Fannie Mae and Freddie Mac maintain condo project review standards, and FHA maintains its own FHA condo approval list of buildings eligible for FHA financing.

If the building doesn't meet these standards, your financing options shrink, your down payment requirement can climb, and your rate may run a bit higher to offset the lender's added risk. Our guide to condo loan requirements walks you through what documentation to expect.

About townhome loans

Townhomes may avoid a lot of this extra underwriting. Because you own the structure and land, a townhome usually qualifies for a mortgage the same way a single-family home would, without the extra building-level review.

If you're a first-time buyer trying to keep your down payment as low as possible, that difference alone can make a townhome the more flexible option.

Whichever direction you're leaning, getting pre-approved first tells you exactly what you qualify for — and Better's process is entirely online, so you can get a clear answer without scheduling an in-person appointment.

...in as little as 3 minutes – no credit impact

2026 market trends: why townhomes are gaining share

In recent years, builders have been leaning hard into townhome construction as a way to hit lower price points on scarce, expensive land, and it's showing up in market share: townhomes have climbed to roughly 18% of the single-family home market as of recent data, one of the highest levels on record. Industry economists expect this share to keep rising.

This shift is happening against a tough backdrop for first-time buyers generally. First-time buyers made up just 21% of all home purchases in the most recent annual survey, which is the lowest share since the National Association of Realtors began tracking the data in 1981.

Meanwhile, the median age of a first-time buyer has climbed to 40, up from 33 as recently as 2021. Builders are responding to that affordability squeeze directly: expect to see more townhome-heavy developments, particularly in the Northeast and other high-cost metros, as a deliberate move to bring buyers back into the market.

For a first-time buyer, this is good news. More townhome supply generally means more entry-level inventory and, ideally, more competition on price.

Pros, cons, and how to decide which is right for you

Neither a condo or a townhome is universally better. Your decision should come down to what you're optimizing for.

Condos tend to make sense if you want:

• The lowest possible purchase price in an urban or high-cost area
• Minimal exterior maintenance (no roof, siding, or landscaping to worry about)
• Building amenities like a gym, pool, or doorman

Townhomes tend to make sense if you want:

• More space and a layout closer to a traditional house
• Fewer building-wide financing hurdles
• A small yard or patio without full single-family upkeep

Need more info? Our breakdown of different types of homes can help you think through lifestyle fit alongside cost.

Whichever you choose, both are legitimate on-ramps to building equity as a first-time buyer.

FAQs about condos vs townhomes

Is it better to buy a townhome or a condo as a first-time buyer if I don't want a lot of maintenance?

Condos generally require less of your own maintenance since the association handles the exterior, roof, and shared spaces. Townhomes still shift some exterior responsibility to the owner, though usually less than a full single-family home.

Can I get an FHA loan for a condo, or do I need a bigger down payment?

You can get an FHA loan for a condo, but only if the building appears on FHA's approved condo list. If it doesn't, you'll likely need a conventional loan instead, which can mean a larger down payment depending on the lender and building's financials.

Why do condos usually have higher HOA fees than townhomes?

Condo association fees typically cover more shared infrastructure (building roofs, elevators, hallways, sometimes utilities) while townhome HOA dues are often limited to community amenities and common-area landscaping, since owners maintain their own structure.

What's the biggest downside to buying a condo as my first home?

The biggest risk is exposure to the building's overall financial health. A poorly funded reserve account can lead to a surprise special assessment, and litigation or high investor-ownership in the building can even make it harder to get approved for a loan later, which can affect resale.

Do townhomes or condos hold their resale value better?

Good question. This varies by market, but townhomes often hold value slightly better because financing is simpler for the next buyer too. Condo resale can be more sensitive to the building's financial health and owner-occupancy rate, which future lenders will also scrutinize.

Bottom line about condos and townhomes

A townhome usually offers more space and simpler financing, while a condo can offer a lower entry price with more building-level rules to navigate.

Both are reasonable starter-home paths. The right one depends on your budget, your tolerance for shared-building financing requirements, and how much maintenance you actually want to take on.

A pre-approval can show your price range and help you decide.

...in as little as 3 minutes – no credit impact