What do you think of when you hear the word “home?”

Maybe you’re picturing a location, with a community and a neighborhood. Or maybe it’s a plot of land or a physical structure. But no matter what image comes to mind, “home” is an important place in your life – and you want to find one that feels “just right.” And for many, a townhouse might fit that bill.

But what is a townhouse? We’ll cover the definition of townhouse, explore reasons why you might want to buy a townhouse, the pros and cons of doing so and look at whether you’re ready to buy a townhouse. By the time you’re done reading, you may have a better sense of whether a townhome fits your needs and preferences.

Note that once you’re ready to start researching and visiting townhouse communities as part of your homebuying journey, you’ll also want to get a mortgage pre-approval to expedite the offer process.

What is a Townhouse? 

A townhouse – usually a tall, thin structure – refers to conjoined units with multiple floors owned by individual tenants. Owners usually share at least one or more walls with other tenants but have their own entrances. Townhouses sometimes have homeowners association (HOA) fees, which means you pay a fee to maintain specific areas of a townhouse unit.

Who Would Want to Buy a Townhouse?

Anyone may want to buy a townhouse, but you might be especially interested if you fit into the following categories:

  • First-time homeowners: Buying a townhome is usually less expensive than single-family homes – they often have less square footage and don’t come with surrounding land. Other additional costs like utility, renovation and even insurance are often lower, too (townhouse owners only have to insure the interior of their homes). Millennials or Gen Z buyers may also like the urban areas and opportunities available with townhouse living. 
  • People looking to downsize: Whether you want to downsize for financial reasons or just want less house to take care of, a townhouse could be the right solution for you.
  • Investors: A lower purchase price and lower maintenance costs is certainly a benefit for buyers. In turn, those lower costs often mean cheaper rent for tenants, too.
  • People looking for a second home: With the rising cost of living and home prices skyrocketing across the U.S., a townhome may offer a more affordable option for those looking to purchase an additional property.

The Pros and Cons of Buying a Townhouse

What are the pros and cons of buying a townhouse? Let’s find out.

Pros:

  • Cost: Prices are often lower than single-family home prices, so you may want to consider this option if you’re a first-time homebuyer looking for a starter home. 
  • Maintenance: Owners pay maintenance fees to cover the basics: heat, water, sewer and garbage collection. It’s a good idea to find out how much your maintenance fees will cost before you choose this type of home.
  • Less upkeep: While the square footage may be less than some single-family homes, a townhome can also mean less cleaning, repairs and general home upkeep than with a larger space. This can also be a major benefit for many first-time homebuyers looking for a starter home.
  • Outdoor spaces: Just because a townhouse isn’t detached doesn’t mean it can’t have a yard. Some townhouses offer outdoor spaces enclosed by fences or walls that include outdoor seating and entertainment areas.

Cons:

  • HOA fees: You will most likely have to join an HOA if you move into a townhouse. The amount you pay for HOA fees can vary by townhouse, so be sure to check out the monthly HOA fees before you make a decision.
  • Noise pollution: Similar to apartment living, you may run the risk of living next to (or even sharing a wall with) noisy neighbors when you live in a townhouse. 
  • Multi-floor living: By definition, a townhouse has multiple floors. If you have mobility issues or just aren’t interested in walking up several flights of stairs every day, you may want to reconsider purchasing a townhouse.
  • Less privacy: The fact is, townhouse dwellers will be in close proximity to their neighbors. Consider how much privacy you prefer before you choose to live in a townhouse. If you want a great deal of privacy or don’t like the idea of shared walls, buying a townhouse might not be the right choice for you.

5 Tips for Buying a Townhouse  

Here are a few things you may want to do before you buy a townhome:

  • Consider your budget: How much money do you want to spend? Before buying a home, pencil out how much house you can truly afford by examining your budget. When you’re ready for the next step, you can see how much a lender will loan you by getting a mortgage pre-approval
  • Make a must-have list: Put together a list of requirements you really want in your community. For example, if you require good schools or certain amenities, include those in your list of needs. 
  • Check out the common areas: Do you like the common areas in the townhouses you’re considering? What types of common areas are available to you? 
  • Read the HOA rules: It may not sound fun, but it’s important to read your HOA covenants so you know the rules if you choose to move in.
  • Think long-term: Do you want to stay in the house long term? Many experts suggest buying a home with a preference to live in it for a number of years.

Are You Ready to Buy a Townhouse?

When you’re ready to buy a townhouse, you’ll want to go down the checklist of items you need to have before you apply for a mortgage. Consider the amount of debt you have, and remember: the lower your debt-to-income ratio (DTI), the better your chance of qualifying for a mortgage. 

Lenders want to learn as much as possible about your assets because they want to make sure you have “extra money” to make your mortgage payments. They may want to see what’s in your checking account, savings account, retirement accounts, other stock and bond allocations, life insurance policies and trusts. Consider putting together an emergency savings fund with enough liquid assets to cover three to six months’ worth of expenses and enough savings to make a down payment. 

Will you and your family become new townhouse owners or do you prefer detached houses? Let Morty be your go-to resource in learning about the other things you need to know before buying a home, from closing costs to home equity loans