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Condos, townhomes and HOAs

Townhouse vs condo: ownership, HOAs, insurance and loans compared

A townhouse and a condo can look identical from the street. The difference is legal: what you own, what the association owns and what the lender reviews. Those details shape your insurance, your fees, your repair bills and sometimes which loans you can use.

Reviewed November 2026 · Written for Buy Home Tips from the sources listed below

"Townhouse" describes how a home is built: usually two or more stories, sharing walls with neighbors, often with its own entrance. "Condo" describes how a home is owned. A townhouse-style home can be a condo, and a condo building can contain units that look like single-family houses. What matters is in the legal documents.

What you own

Townhouses in a PUD. Fannie Mae defines a planned unit development as a project or subdivision with common property owned and maintained by an HOA for the owners' benefit. The unit owners hold title to a residential property, the lot and structure, plus an interest in the HOA that owns or manages the common areas. Many townhouse communities are set up this way, so you typically own the land under your home and the building itself.

Condos. In a condo, you own your unit, often described as the interior space, and share ownership of the common elements, such as the roof, exterior walls, grounds and amenities, with other owners. The HOA manages and maintains those common elements.

The deed, plat and HOA declaration tell you which arrangement applies. Ask for them early.

HOA responsibilities and fees

Both usually have an HOA, but what it covers differs. Condo associations often maintain the exterior, roof and shared systems and insure the building, which is reflected in higher fees. PUD townhouse associations may handle only common areas and amenities, leaving roofs, siding and yards to each owner. Read the declaration to see who repairs what, and compare fees in light of what they include.

Insurance

Insurance follows ownership. When the HOA insures the building under a master policy, owners usually buy a policy for their unit interior, belongings and liability. When you own the structure, as in many PUD townhouses, you generally need a policy covering the whole building. Colorado's Division of Insurance publishes a toolkit on how HOA master policies and owners' policies fit together. Ask the HOA for its policy summary and give it to your insurance agent.

How lenders review each

Lenders treat the two differently. Fannie Mae waives project review for units in PUD projects, with some basic requirements still applying. Condos are reviewed as condo projects, and many lenders send the HOA a questionnaire such as Fannie Mae Form 1076, which asks about delinquencies, litigation, ownership mix, reserves and building condition. Fannie Mae also waives review for detached condo units and two- to ten-unit condo projects that are not part of a larger development.

FHA loans on condos generally require the project to be FHA approved or meet single-unit approval rules; HUD offers a search tool for approved projects.

Costs to compare

  • HOA fees and exactly what they cover.
  • Insurance premiums for the coverage you will need.
  • Maintenance you will handle yourself, like roofs and exteriors.
  • Reserves and special assessment risk.
  • Property taxes, which follow assessed value either way.

The bottom line

Townhouse is a style; condo is a form of ownership. Check the documents to see whether you own the lot and structure, compare what the HOA covers, match your insurance to what you own and ask your lender which project review applies.

Comparing a townhouse and a condo

  • Read the deed or plat to see whether you own the lot.
  • Read the HOA declaration to see who maintains roofs and exteriors.
  • Ask which insurance the HOA carries and what you must cover.
  • Compare HOA fees and what they include.
  • Ask your lender what project review applies.
  • Review reserves and any special assessments.

Questions buyers ask

What is the difference between a townhouse and a condo?

A townhouse is a building style, while condo is a form of ownership. In many townhouse communities set up as PUDs, you own the lot and the structure. In a condo, you own your unit and share ownership of the common elements with other owners.

Is a townhouse a PUD?

Often, but not always. Fannie Mae defines a PUD as a project where unit owners hold title to a residential property, the lot and structure, plus an interest in an HOA that owns or manages common areas. Some townhouses are legally condos, so check the documents.

Do townhouses need condo approval for a mortgage?

Usually not if they are in a PUD. Fannie Mae waives project review for units in PUD projects, with some basic requirements still applying. Townhouses legally set up as condos are reviewed as condos.

Which is cheaper, a townhouse or a condo?

It depends. Condo fees often cover more, such as exterior maintenance and building insurance, while townhouse owners may pay lower fees but handle more themselves. Compare total costs.

Sources checked for this page

Checked November 2026. Programs and limits change; confirm with the source before you rely on a figure.

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