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Condo vs a house: which one should you buy?

Everything you need to know about the great condo vs. house debate.

When you are ready to buy property, you’ll probably be faced with the decision of buying a condo vs buying a house. Since both options have advantages and disadvantages, it can be difficult to choose, especially as a first-time homebuyer. In this guide, we explore the pros and cons to owning a condo vs a house.

Condos vs houses

At a high level, condos are usually a better purchase for first-time homebuyers than houses. There is less maintenance involved, it gets you into the housing market quicker and homeownership costs are lower. On the other hand, the process of buying a condo then upgrading to a home is onerous. As a new homebuyer, you might want to commit to a house right away.

AdvantagesDisadvantages
Condo
  • Cheaper than a house
  • Extra security in the building
  • Lower mortgage principal amount
  • Easier and cheaper to maintain
  • Popular in urban, downtown regions
  • Limitations on customizations
  • Less opportunity for capital gain
  • Additional condo fees
  • Privacy may be an issue
  • May not be ideal for families
House
  • No condo fees
  • Greater opportunity for capital gain
  • More customization
  • More space and land
  • Popular in suburban, rural regions
  • Ideal for families
  • More expensive to buy
  • More expensive and time consuming to maintain
  • Mortgage qualification may be more challenging

Condos vs townhouses

What about a condo vs a townhouse? A townhouse is essentially a hybrid between a condo and a house. Usually, they are single-family dwellings with at least 2 floors. Townhouses are often part of a group of homes, which means you share at least 1 wall with someone else. Keep in mind that townhouses are not the same as a duplex, triplex or fourplex because they’re owned by one individual or family.

Condos and townhouses are more similar than houses and condos. For this reason, you may think either investment is alike. However, there are some subtle differences. Let’s take a closer look at the advantages and disadvantages of a condo vs townhouse below.

AdvantagesDisadvantages
Condo
  • More affordable
  • Extra security in the building
  • Lower mortgage principal amount
  • Easier and cheaper to maintain
  • Popular in urban, downtown regions
  • Limitations on customizations
  • Less opportunity for capital gain
  • Additional condo fees
  • Privacy may be an issue
  • May not be ideal for families
Townhouse
  • More space than a condo
  • Higher value than a condo
  • More customization
  • Selective maintenance costs depending on community requirements
  • More ideal for families
  • Monthly fees are an additional cost
  • Less security
  • More homeowner responsibilities
  • Privacy may be an issue

Mortgages: Buying a condo vs a house

Interest rates don’t vary much between condos and houses; however, it can be easier to qualify for a mortgage on a house. This is because of the way mortgage providers determine the amount they’re willing to lend borrowers.

Typically, lenders assess your debt to income ratio, which measures how much you are able to afford. In other words, it is how much debt you can afford based on your existing gross income. A lower debt to income ratio is more favourable.

Interested in buying a condo? Compare condo mortgage rates here.

The calculation of the total cost of condo ownership includes your mortgage payment, property taxes, utility costs and 50% of the condo maintenance fees. Since condos have condo fees and houses do not, the total cost of ownership will be naturally higher for a condo vs a house, even though a house purchase will have additional maintenance fees as well — they just aren’t included in the calculation.

Additionally, if you are buying a house with a rental unit in it, you may be able to add up to 50% of the potential rental income to your total income, which will have a further positive impact on your debt to income ratio.

Interested in buying a house? Compare house mortgage rates here.

With all that said, obtaining a mortgage for a condo should be easier since the principal amount is typically lower than a house. All of these metrics depend on the lender and their unique underwriting policies.

Condo fees vs house expenses

When you own a condo, you must pay condo fees. This expense covers the cost of maintaining the building, common areas and amenities. Examples include yard work, security, janitorial services, pool maintenance, gym maintenance and exterior repairs. You’re paying the condominium for work that you would otherwise have to complete yourself if you owned a house.

With a house, it is entirely your responsibility to maintain the entire property on your own. This includes the labour and cost. Some people choose to outsource this responsibility by hiring a service, but that is the homeowner’s duty to oversee and pay for. If you need a roof repair or a manicured lawn, it’s the homeowner’s obligation to pay the house expenses.

Condo fees and home expenses cover the same overall duties and responsibilities of property ownership. In practice, the costs of maintaining a condo vs a house may be vastly different depending on the many factors that influence the cost. Before proceeding with a property investment, be sure to estimate these costs as best as you can. Look at condo amenities, property age and size, and current condition. The amount will vary from property to property, but estimating the costs can help you make an informed decision.

Bottom line

Condos, houses and even townhouses all have advantages and disadvantages to consider when you are looking to buy a property. At the end of the day, it all depends on your preferences, lifestyle and finances.

Frequently asked questions

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