If you’re shopping for a home in a vibrant, walkable part of town, you’ve probably come across both condominiums and townhomes. While they might look similar at first glance, the ownership structure—and how it affects financing and resale—couldn’t be more different.  

🏠 What’s the Real Difference?

The biggest distinction is what you actually own.

• Condo = You own the interior space of your unit. The building, roof, land, and common areas are jointly owned with other residents through a homeowners association (HOA).
• Townhome = You typically own the unit itself plus the land underneath, and sometimes the roof or exterior too. It feels more like owning a single-family home, just with shared walls and a smaller footprint.

But here’s where it gets interesting—and where many buyers get caught off guard.

💰 Why Financing Matters More Than You Think

Condo financing is not just about you—it’s about the entire building or community.

When a lender evaluates a condo purchase, they don’t just look at your credit score. They also scrutinize the health of the development itself:

• How many units are rentals vs. owner-occupied?
• Is the HOA adequately funded?
• Is the building insured properly?
• Are there any lawsuits against the HOA?

If too many units are rented out (often more than 50%), it can disqualify the building from conventional financing. That means future buyers might not be able to get a loan, leaving only cash buyers in the game—which often slows price growth or even drags down resale value.

By contrast, townhomes are typically easier to finance because they’re treated more like single-family homes. Lenders don’t require the same deep dive into the development, which can mean fewer surprises now—and less risk when you go to sell.

The Bottom Line

Condos and townhomes both offer great options for city living—but the fine print matters. If you want to protect your investment, make sure you understand how ownership structure affects financing, resale, and long-term value.

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