The pros and cons of buying a townhouse: What to know first

Written by Samantha SheltonNMLS 1647301Updated November 2026

A townhouse splits the difference between a condo and a single-family home: you typically own the structure and the lot under it, pay less than a comparable detached house nearby, and hand the exterior chores to a homeowners association in exchange for shared walls, monthly dues, stairs and appreciation that generally trails detached homes. That trade is a common one, and townhouses made up 17% of all single-family housing starts in the second quarter of 2026, roughly one in six new single-family homes.

The four-quarter average share reached an all-time high of 18.7% in the third quarter of 2025, the strongest reading in a series going back to 1985. Townhouses fit first-time buyers and low-maintenance households best; buyers who want privacy, a real yard or single-level living usually keep looking.

Learn the pros and cons of buying a townhouse, including how townhouse ownership differs from a condo, what the dues buy, and what to verify before you write an offer. Our Home Types & Living guide covers the other formats worth comparing.

Key takeaways:

• Ownership, not architecture, defines a townhouse: You typically own the whole structure across all 2 or 3 levels plus the land beneath it, while a condo owner owns only the interior, the distinction that drives your financing, insurance and monthly dues.
• Cost and low maintenance are the core pros: Townhomes price below comparable detached homes because they sit on far less land, an association usually handles the exterior, and an interior unit loses heat through 2 exposed walls instead of 4.
• Shared walls, stairs and dues are the trade-offs: Attached homes come with an association almost by default, 96% of new attached homes in the West and 77% in the Northeast sit inside a homeowners association, and those rules and fees follow you for as long as you own.

Pros and cons of buying a townhouse at a glance

Nearly every advantage has a matching cost, and the same feature often produces both.

For a second opinion, the CFPB’s Owning a Home guide walks through the buying process in four steps, from preparing to shop to getting ready to close.

What is a townhouse?

A townhouse is a multi-story home attached to at least one neighbor by a shared wall, where the owner typically holds title to both the structure and the small lot beneath it. That last clause is the whole definition: architecture makes a home look like a townhouse, but the deed makes it one.

Most townhomes run 2 or 3 stories on a narrow footprint, with a street-facing front door, a garage, and sometimes a patio. End units have 1 shared wall and windows on three sides; interior units have 2 shared walls and windows front and back only, a difference worth more than it sounds. Our guide to the different types of houses by structure and style maps where townhouses sit among rowhouses and duplexes.

What the shared wall actually is

The wall between two townhouse units is a fire barrier before it is anything else. Under the model residential code most jurisdictions build to, it must be a fire-resistance-rated assembly, not less than 1 hour where an automatic sprinkler system is installed, not less than 2 hours where one is not, running continuously from the foundation to the underside of the roof sheathing, with no plumbing, ducts or mechanical equipment inside the cavity.¹

Fire rating and sound rating are different things. A wall can satisfy the fire requirement and still pass along a neighbor’s television, because sound insulation sits in an optional appendix that applies only where a jurisdiction adopts it. That is why two townhouses built the same year in different towns can sound so different.

Townhouse vs. condo vs. single-family home: how they compare

The differences that matter here are legal and financial, not visual.

One caution: a building can be a townhouse architecturally and a condominium legally. Plenty of townhouse-style communities are organized as condominium regimes, which changes your dues, insurance and loan file even though the front door looks identical. Weigh the pros and cons of buying a condo before assuming the two are interchangeable, and if a listing mentions shares rather than a deed, read our comparison of condo and co-op ownership.

How common are townhouses in Michigan compared with the rest of the country?

Less common here than nationally. In the Census Bureau’s 2024 American Community Survey, one-unit attached homes made up about 4.7% of Michigan’s owner-occupied homes, against about 6.4% nationwide (shares computed from the Census table B25032, tenure by units in structure).

Source: U.S. Census Bureau, American Community Survey 2024 1-year estimates, table B25032. Shares computed by Align Lending from the table’s counts.

In Michigan, roughly 1 attached home in 3 is rented, one reason to read the association’s leasing rules before you buy, especially if you might rent the unit out later.

New construction has cooled after a strong run. Robert Dietz of the National Association of Home Builders reported 159,000 townhouse starts over the four quarters ending in the second quarter of 2026, down 12%, with the one-year moving average share falling back from the record noted above to 17.4%. Before the current cycle, the two-decade peak was 14.6% (one-year moving average), in the first quarter of 2008 (NAHB Eye on Housing, August 20, 2026).

Sources: National Association of Home Builders analysis of Census Survey of Construction data, Eye on Housing, January 9, 2026 (Q3 2025 rows) and Eye on Housing, August 20, 2026 (Q2 2026 rows).

The pros of buying a townhouse

The case is strongest for buyers who want to own in a specific location and would rather not spend weekends maintaining it.

• Lower entry price for the same location: Townhomes cost less than comparable detached homes nearby largely because they sit on a fraction of the land. Where detached listings have moved out of reach, attached inventory is often the only option under the local median.
• Someone else handles the exterior: Most townhouse associations contract out landscaping, snow removal and common-area upkeep, and many cover roofs and siding, trading an unpredictable repair bill for a predictable monthly one.
• Shared walls cut energy loss: An interior unit has 2 exterior walls exposed to the weather instead of 4, with neighbors buffering both sides, generally lower heating and cooling demand than a detached house of the same size.
• Amenities without a separate membership: Pools, fitness rooms and clubhouses come bundled into the dues in many communities, a benefit only if you use them, because you pay either way.
• Location and walkability: Townhouses get built where detached homes cannot pencil out: near downtowns, transit and job centers. For buyers who value a short commute over a big yard, that is the whole argument.

Do townhouses really cost less to heat and cool?

Per household, yes; per square foot, barely. The U.S. Energy Information Administration’s Residential Energy Consumption Survey found that in 2020 the 7.45 million single-family attached households used about 29% less energy than detached households and spent about 25% less on it, $1,653 against $2,205 (EIA Table CE1.1, 2020 RECS). Per square foot, the two used nearly the same energy, so most of the gap tracks the smaller floor area of a typical attached home. Homes of all types in Michigan’s East North Central division used 98.3 million Btu per household, against 76.8 million Btu for all homes nationally in the same table.

Source: U.S. Energy Information Administration, Residential Energy Consumption Survey 2020, Table CE1.1.

For a specific unit, ask the seller for 12 months of utility bills; an energy audit shows where the rest goes.

The cons of buying a townhouse

Every advantage has a cost attached, and all 5 of these are structural features of the format, not problems you can renovate away.

• Noise and privacy: A shared wall makes a neighbor’s schedule part of your environment. Party walls with staggered framing and solid mass are genuinely quiet; minimum-code walls in older or value-built rows are not. It is also the hardest trade-off to undo, because you cannot renovate your way out of it after closing.
• Dues and rules that never end: Fees are a permanent budget line, they rise, and special assessments arrive without warning when reserves fall short. Rules can govern paint, fencing, parking, pets and rentals. Read the pros and cons of buying a home with an HOA before you decide.
• Less space, inside and out: A townhouse stacks its square footage vertically on a narrow footprint, so rooms run smaller and storage tighter than in a detached home of similar size. The yard, where there is one, is usually a patio.
• Stairs, on every trip: A 3-level layout puts the bedrooms 2 flights from the garage. That is fine at 35 and a real constraint at 70, and it complicates caring for anyone with limited mobility.
• Slower appreciation and a narrower buyer pool: Land drives long-run appreciation and townhomes carry less of it, so they generally gain value more slowly than detached homes nearby. Resale also depends on the association. Thin reserves or open litigation are hard to sell into.

Are the stairs in a townhouse a problem as you get older?

They can be, and the risk is measurable. According to the Centers for Disease Control and Prevention, more than one out of four adults ages 65 and older falls each year (CDC, Older Adult Falls Data).

If you plan to stay, look for a bedroom and full bath on the entry level. The National Institute on Aging suggests going through a home room by room and starting with immediate dangers, such as loose stair railings and poor lighting (NIA, Aging in Place). See our guides to aging in place and downsizing.

How townhouse financing differs from condo financing

Ask one question before you fall in love with a listing: is this unit fee simple, or a condominium? The answer changes your loan file more than the floor plan does.

When a townhouse is fee simple, you own the structure and the ground, the loan generally looks like any other single-family mortgage. The lender underwrites you and the property and moves on. When the same-looking building is legally a condominium, the lender also reviews the association: budget and reserves, master insurance, owner-occupancy, delinquent dues and pending litigation. A healthy association clears that quickly; a strained one can stall a file that was otherwise approved.²

None of that is visible from the curb, so ask the listing agent for the legal form of ownership and confirm it against the recorded documents. Our overview of condominium financing covers what a project review examines. Because Align Lending is a broker, we can place an attached-home file with whichever wholesale lender in our network is most comfortable with that project. Which matters most where a single bank would say no.

How does Fannie Mae decide whether a townhouse community is a PUD or a condo?

By the legal documents, not the floor plan. Fannie Mae’s Selling Guide defines a planned unit development (PUD) as “a project or subdivision that consists of common property and improvements that are owned and maintained by an HOA.” It treats a development as a condo project “any time it is declared or filed as a horizontal property regime,” unless local law lets that regime be created as a PUD and the legal documents say it is one (Fannie Mae Selling Guide B4-2.1-01).

For a unit in a PUD, Fannie Mae waives project review apart from some basic requirements (PUDs made up of manufactured homes are handled differently), so the file focuses on you and the unit. A condo project gets the association-level review described above.

Samantha Shelton, Align’s broker owner, puts the order of operations simply: “I want the work done before somebody has their heart attached to a house.”

How much are HOA fees, and how do they affect what you can borrow?

Usually modest, with a long tail. The Census Bureau reported that around 21.6 million of the nation’s 86.6 million owner households, about 25%, paid a condo or HOA fee in 2024. The median fee was $135 a month. About 5.6 million homes, or 26% of fee payers, paid under $50 a month, while about 3 million paid more than $500 (Census Bureau, September 11, 2025, from the 2024 American Community Survey).

Associations are less common on new Midwest homes. In the Census Bureau’s Survey of Construction for 2025, 644,000 of the 1,005,000 new single-family homes completed, or 64%, sat in a homeowners association; in the Midwest, Michigan’s region, it was 67,000 of 131,000, or 51%.

Source: U.S. Census Bureau, Characteristics of New Housing, Homeowners’ Association for New Single-Family Houses Completed (2025). The table covers attached and detached homes together.

Dues also count against you when you borrow. Fannie Mae’s Selling Guide lists “any owners’ association dues” and special assessments in the monthly housing expense (PITIA) a lender uses for the debt-to-income ratio (Fannie Mae Selling Guide B3-6-03). Our debt-to-income ratio guide explains how that ratio is built.

Hypothetical example, not an offer. Suppose a townhouse carries dues of $250 a month and the association raises them 4% a year. Year 1 costs $3,000; by year 5 the dues are about $292 a month, and the 10-year total is about $36,018. On a household income of $6,000 a month, the first year’s $250 alone adds about 4.2 percentage points to the debt-to-income ratio.

Our guide to budgeting for your first home shows where association dues fit in a monthly budget, and our rent vs. buy calculator and other calculators compare the full monthly cost with renting.

What insurance does a townhouse owner need?

It follows the deed. Michigan’s Department of Insurance and Financial Services calls the all-risk HO-3 the most common homeowners policy. A condominium HO-6 policy works differently: its limit is set mainly by the value of your contents, plus coverage for the part of the dwelling that belongs to you, including alterations, appliances, fixtures and improvements. DIFS also lists loss assessment coverage as an option on HO-6 policies only (DIFS, Your Guide to Homeowners Insurance for Michigan Consumers).

Whichever applies, get the association’s certificate and line it up against your own policy: the City of Boulder’s HOA checklist frames the same step as “What does the HOAs insurance cover?” and asks whether owners should carry special assessment coverage (City of Boulder HOA checklist). Our guide to evaluating home insurance options walks through comparing quotes.

What to check before you make an offer on a townhouse

Four checks, in this order. The first prevents more bad outcomes than the other three combined; HUD’s home-buying guidance is a useful companion to all four.

• Read the association documents before anything else: Request the budget, the reserve study, the last 2 years of meeting minutes, the insurance certificate, the rules, and the history of dues increases and special assessments. Minutes are the honest document: roof debates and litigation surface there long before a disclosure does. Our guide to navigating HOA regulations covers what to look for.
• Confirm who maintains what: “The HOA handles the exterior” is a claim, not a fact. In many communities owners maintain their own roofs, siding, windows and driveways, which is exactly why the dues sit below condo dues. Get the split in writing.
• Test the walls and the stairs: Visit at night and on a weekend, not at 2 p.m. on a Tuesday, and ask the neighbors directly. On new construction, ask what the party wall assembly is. Then count the flights between the garage, the kitchen and the bedrooms against how long you intend to own.
• Price the whole monthly payment: Principal and interest, taxes, insurance and dues. Dues are the line buyers forget and the line most likely to grow. The CFPB’s home-buying tools help you build that number, and our Homeownership guide covers the recurring costs that follow closing.

What should you know about buying a townhouse in Michigan?

Four points are specific to buying a townhouse here.

An attached community can be a condominium under Michigan law

Michigan’s Condominium Act (1978 PA 59) defines a condominium project as a plan “consisting of not less than 2 condominium units,” so even a short row of attached homes can be a condo legally (MCL 559.104). A project is established when a master deed that complies with the act is recorded (MCL 559.172), and the act requires every association of co-owners to keep “a reserve fund for major repairs and replacement of common elements” (MCL 559.205).

Buying new from a developer comes with documents and a window

When a developer sells a unit, it must hand you the recorded master deed, the purchase and escrow agreements, a condominium buyer’s handbook and a disclosure statement that includes a projected budget for the association’s first year (MCL 559.184a). You may then withdraw from a signed purchase agreement without cause and without penalty within 9 business days after receiving those documents, and your deposit must be returned within 3 business days after you withdraw (MCL 559.184). The statute is written around developer sales; on a resale between owners, ask for the same documents in your purchase agreement. On a new unit, also book a new construction inspection.

How condominium disputes are settled

The Department of Licensing and Regulatory Affairs’ notice of remedies under the act says a co-owner may take action against the association to compel it to enforce the condominium documents. A purchaser or co-owner has the exclusive option to settle a claim against the developer of less than $2,500 by arbitration (LARA, Notice of Available Remedies under the Condominium Act, 1/2019).

The shared wall, the tax bill and the transfer tax

Michigan’s own amendment to the townhouse separation rule calls for a 2-hour fire-resistance-rated wall between units, or a common 1-hour wall where an automatic sprinkler system is installed (Mich. Admin. Code R 408.30544a). The Legal Information Institute lists that rule as rescinded effective August 29, 2025, but LARA says a July 7, 2025 Michigan Court of Claims order keeps the 2015-based residential code in effect while the litigation continues (LARA, Residential Code rule sets).

Taxes follow the same rule as any Michigan home. In Michigan, a home’s taxable value is capped while one owner holds it. The year after it sells, that cap comes off and taxable value resets to the state equalized value, which is half of the assessor’s estimate of market value, not automatically half of what you paid (Michigan Treasury, Changes in Ownership and Uncapping). Run the address through our Michigan property tax calculator and read how property tax assessments work before you set a budget.

The state real estate transfer tax is $3.75 for each $500 of value or fraction of $500 (MCL 207.525), and the county tax is $0.55 for each $500 in counties under 2,000,000 people (MCL 207.504). Hypothetical example, not an offer: on a $250,000 townhouse sale, that is $1,875 state plus $275 county, $2,150 in all. Our Michigan transfer tax calculator runs the math for any price.

FAQ: Buying a townhouse

Here are answers to common questions about the pros and cons of buying a townhouse.

Is buying a townhouse a good investment?

Townhouses can be solid investments, especially in supply-constrained metros where they are the affordable alternative to detached homes. They generally appreciate more slowly than single-family houses but faster than many condos, and lower purchase prices mean easier entry. Location, association health and build quality drive returns more than the housing type itself, so evaluate those first, our Homeownership guide covers how equity actually accumulates.

What is the difference between a townhouse and a condo?

The difference is ownership structure, not architecture. With a townhouse you typically own the entire structure plus the land beneath it; with a condo you own only your unit’s interior while the association owns the building and grounds. That means townhouse owners usually carry standard homeowners insurance and often pay lower dues, while condo financing faces extra lender scrutiny. Compare the pros and cons of buying a condo before choosing.

Do townhouses have HOA fees?

Most do. Townhome HOA fees typically cover shared amenities, common-area landscaping and sometimes exterior maintenance like roofs and siding, though in many communities owners maintain their own structures, which keeps dues below condo levels. Always confirm what the fee covers, the association’s reserves, and the history of increases before you make an offer. Our guide to buying a home with an HOA explains how to read those documents.

Are townhouses noisy because of shared walls?

It depends heavily on construction quality. Modern townhomes built with sound-rated party walls, staggered studs and solid separation can be remarkably quiet, while older or cheaply built rows transmit footsteps and conversations. Visit at different times of day, ask neighbors about noise, and find out how the shared wall was built before buying, our guide to the different types of houses by structure and style covers how attached construction varies.

Are HOA fees tax deductible on a townhouse you live in?

No, not on a home you live in. IRS Publication 530, for 2025 returns, lists homeowners association and condominium association fees as nondeductible. Property taxes are different: the 2025 cap on deducting state and local taxes is $40,000 ($20,000 married filing separately), reduced above $500,000 of modified adjusted gross income but not below $10,000. A tax professional can apply it to your return; our guide to new tax laws and homeownership has more.

Can you use an FHA loan to buy a townhouse?

Usually, yes. A fee simple townhouse is underwritten much like a detached house. If the community is legally a condominium, FHA looks at the project: either the whole project is FHA-approved, which HUD lets you search by location, name or status, or the single unit is approved inside a complete project of at least five dwelling units (HUD, FHA Condominiums). Align is not affiliated with HUD or FHA; our FHA loans guide covers the rest.

Is a townhouse the same as a duplex?

No. A townhouse is one home in its own structure, joined to neighbors by a shared wall and usually on its own lot. A duplex is one building that holds two homes. The Census Bureau counts them on separate lines, and in 2024 Michigan had 14,374 owner-occupied homes in two-unit buildings (ACS table B25032). Our guide to investment property types explains how two-unit buildings are bought and financed.

Do you need flood insurance on a townhouse?

When the location or lender calls for it. FEMA’s FloodSmart site says you are required to have flood insurance if you own a home in a Special Flood Hazard Area and have a government-backed mortgage, and some banks require it elsewhere (FloodSmart). Michigan’s insurance regulator notes that a regular homeowners policy does not cover flood damage (DIFS guide). Check the FEMA map for the address; see our guide to buying in a flood zone.

The bottom line on buying a townhouse

A townhouse gives you a multi-story attached home where you typically own the structure and the lot, priced below comparable detached houses nearby, with the exterior work handed to an association. You accept shared walls, permanent dues, 2 or 3 levels of stairs and appreciation that generally trails detached homes. The format is popular for a reason, townhouses were 17% of all single-family housing starts in the second quarter of 2026, but the deciding factors are the association’s health, the party wall, and whether the unit is fee simple or a condominium.

If you’re ready to compare what an attached home actually costs each month, talk to Align Lending. We’ll shop your scenario across our lender network and show you the numbers side by side. Call 248-506-5727 or start online.

Footnotes:

1. The 1-hour and 2-hour common-wall ratings, the continuity requirement and the restriction on plumbing and mechanical equipment inside the cavity come from the townhouse separation provisions of the International Residential Code. Editions, local amendments and adoption dates vary by jurisdiction, and older townhouses were built to whatever edition was in force at the time. Confirm what applies to a specific property with the local building department. Return to text.

2. Align Lending is an independent mortgage broker and does not set loan terms or project eligibility standards. Underwriting requirements, condominium and planned-unit-development review standards, and available loan programs are set by the wholesale lenders in Align’s network and the investors that purchase the loans, and are subject to change, credit approval and property eligibility. Nothing here is an offer of credit or a commitment to lend. Return to text.

Sources: townhouse share of single-family housing starts (17% in the second quarter of 2026; an all-time high four-quarter average of 18.7% in the third quarter of 2025, for a series beginning in 1985), National Association of Home Builders analysis of U.S. Census Bureau Survey of Construction data. Share of new attached homes in a homeowners association (96% in the West, 77% in the Northeast), U.S. Census Bureau, Characteristics of New Housing, 2025. Common-wall fire ratings and the optional sound transmission appendix, International Code Council, International Residential Code.

This article is for informational purposes only and is not intended to provide legal, financial, tax, or engineering advice. Association dues, community rules, insurance requirements, construction standards and lender guidelines vary by community, jurisdiction and lender and change frequently, verify current details for any specific property before you make an offer. Align Lending is an independent Michigan mortgage broker, NMLS #2041154.

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