ownhouses are a perfect buy for the people who don't want to live in a condo but find the detached houses expensive. Buying townhouses can be overwhelming, especially if you are a first home buyer. Since purchasing a home is a big financial decision, you might be anxious about making a costly mistake.

But, don't worry; this article will guide you throughout your buying process.

What Is The Process For Buying A Townhouse?

Buying a townhouse is similar to buying a traditional home. The buying process is comparatively easier than buying a condo which requires a lot of financial requirements. For the townhouse buyer, below are the necessary steps:

Paying for a house

1. Set Your Budget

When buying a townhouse, the foremost thing to do is set a budget. It would be best to determine how much you can afford by conducting a financial assessment. Start by reviewing your spending habits to get an idea of how much you spend and save. After buying a property, you'll need to put aside additional money for mortgage payments. Thus, you must ensure that you can afford to pay off the extra expenses incurred.

You can use the online calculators to know how much you'll have to pay each month.

Generally, your mortgage payment should not exceed 31% of your monthly salary, and your debt-to-income ratio should not surpass 43%.

2. Get Preapproved For A Mortgage Loan.

Before you start house hunting, getting preapproved for a mortgage loan is essential. When you apply for the mortgage and get preapproved, the lender will state how much loan you can borrow based on your credit score, income, and assets. Having determined a budget, you may begin browsing for properties within that range. Preapproval offers you negotiation leverage since the seller will perceive you as a serious buyer.

3. Hire A Real Estate Agent

For purchasing a property, it's highly recommended to work with a real estate agent with much expertise and is one of the finest in their field. Your agent will guide you throughout the buying process, from house-hunting to closing the deal. You need to specify your needs, requirements, budget, and preferred location so your agent can find you the best deal.

Real estate agents would charge you specific commission fees, but it's worth more than overpaying for your property or getting scammed. Agents know the real estate market inside and out and will ease your home buying process.

Real Estate Agent

4. House Hunting

The house-hunting is likely to be an exhausting phase. Even though your real estate agent will handle this for you, it's best if you take an active role in the process. The agent will provide you with a slew of possibilities, but it is ultimately up to you to choose the ideal one for your needs. As a result, you should look at several properties before making an offer.

5. Set An Inspection Date

Inspection is a must when buying any house. During the inspection, an inspector will go through the home and look for any problems. They will thoroughly test the potential issues for the electricals, drainage system, roofing, and wall. The inspector will provide a report detailing any problems they discovered throughout the inspection.

Check on the inspection results to find the significant issues. The primary thing to look out for in the townhouse is the construction of the walls, which you will be sharing with your neighbors. Make sure that firewalls are constructed, or any soundproofing or insulating material is used. Also, there should be no leakage. The inspection report itself won't be enough. So, you can go around the neighborhood to ask about their problems with their house.

6. Ask For Repair Or Credits.

If there are significant issues with leaking drainage or non-insulated walls, you can ask for the repair from the seller or reduce the housing price based on that. Any problems with the house mean you need a renovation which will cost you additional money. So, ensure you have deducted that extra money from the housing price beforehand.

7. Make An Offer On The House.

After thoroughly inspecting it, you can finally make an offer if you think the house meets your need and requirements. It would be best if you bid appropriately based on the market. The wrong bid may lead to losing the house since the real estate market is piping hot, with so many buyers needing to purchase the home. However, even if sellers dominate the market, it does not imply you should overpay. Make a fair offer based on the house's actual market value. You can ask the neighbors to get an insight regarding it.

Also, since the real estate market is piping hot now, you can write a letter of interest along with an offer letter to build a personal connection with the seller. This will help you stand out from the buyers and even land you a good deal. After you make your initial offer, there will be a tug of war in the negotiation before closing on a final price.

Read this article for 10 Tips On How To Negotiate A Home Purchase>>

8. Close To Your New Home

Now, this is the moment you have been waiting for. But, you will need a little more hard work and patience while signing up dozens of documents, including the land, property, insurance, etc. You should be attentive while signing all these contract papers to ensure everything on the contract is the terms and conditions you agreed on. Since the legal terms can be a little confusing, it's highly recommended to attend the signing day with your agent or lawyer. They have more ideas about this terminology and contract terms. After signing all the papers, you can now have your key to your new house.

Family closing on a new home

Is A Property Survey Required For Buying A Townhouse?

When buying a townhouse, there is no legal requirement for a property survey. However, it is highly recommended to survey due to following reasons :

Know The Exact Condition Of The Home

A property survey provides details of the boundary lines and legal description of a property, including the area and condition of the home. When you do a survey, you know the exact condition of the house, and the surveyor will determine if the property has any structural problems. Since the townhouse has shared walls with the neighbors, it's essential to know about the formation of the wall. You should know if the house has a proper drainage system and there is no leakage and damp walls.

Title Search

A title search aims to determine who has legal title to the property and what liens or claims may exist against it. This protects you against the seller's deception and from being scammed. Sometimes, the property might be in the name of two owners, and one may sell the property without the consent of the other. Such situations will invite unnecessary legal troubles. As a result, it is essential to know whether the seller entirely holds the home or is jointly owned. If the property is jointly owned, the other owner's consent should be accessible for the buyer to consider.

Legal Information

A property survey provides you with the legal information which you need to know to prevent yourself from lawsuits and neighborhood disputes. Since you live close to neighbors, there are high chances for legal disputes. It's crucial to know about the legal information of your property to protect yourself from being unnecessarily sued.

Recognize Your Boundary Line

A property survey tells you where your boundary lines are so that you know where you can build additional structures such as pools, fences, or driveways. Since the townhouses are attached, it's hard to figure out the boundary line for the outdoors. A property survey will help you know about it beforehand so that you won't fall into legal trouble later on.

Identify Existing Easement

A property survey will tell you if there are any existing easements over your property, such as water mains, underground cables, and so on. It is important to know if any easement is present to avoid erecting any structures over them.

How To Get Loans To Finance A Townhome?

For the most part, financing a townhome is the same as funding a detached single-family home. Unlike a complex condo loan, financing a townhouse is comparatively more straightforward. You can fill out a loan application with the required documents.

FHA loans are the best option for a mortgage, especially if you are a first-time buyer. They are more accessible and less expensive. Also, if you're a first-time home buyer with less-than-perfect credit, you may want to look for Fannie Mae's Home ready loan or Freddie Mac's house potential loan. If you have a good credit score, you can opt for conventional loans, which don't need a sizeable down payment and have fixed interest rates.

In addition, it is critical to engage with lenders with much expertise in approving townhouse loans. Specific lenders treat townhouses as condos, and loans are processed accordingly. Despite the similarity between townhouses and condos, there is a big difference in ownership.

The condo owners only own the house, whereas townhouse owners own the home and land. Thus, a condo is valued upon the house only, but a townhouse is valued on the land and house. Since there is complexity in the ownership of a condo, it's hard to finance a condo loan. But, since the townhouse has well-defined ownership, it's easier to define its value, and financing is more straightforward.

Is Property Tax Low In Townhouses?

Property tax is determined by two main factors: your home's assessed value and your area's tax rate. The land determines the home's assessed value, as well as the number of rooms, and the construction type. Similarly, the tax is defined by your area's public amenities, such as schools, hospitals, and parks. The more the public amenities, the more tax you must pay.

Comparatively, townhouses have cheaper property taxes than single-detached houses. Since the townhouse covers less land, the land tax is relatively lower. However, compared to the condo, it can be a bit expensive, as, in a condo, the taxpayer shares the tax due for the land and common areas, making it a bit cheaper than the townhouse where the owner is solely responsible.

Is It Hard To Sell A Townhouse?

It depends on the location of the townhouse. Townhouses are comparatively smaller dwellings attached to another neighbor's house, so they might be hard to sell to people looking for ample space and a private environment. Similarly, if the person is looking for a townhouse to downsize or to live in the core area, they can quickly sell a townhouse at a reasonable price. Townhouses in the core area sell better, whereas selling townhouses in the suburbs might be a bit hard.

Well, if you have a townhouse in mind that you like and are looking to get started on a process to finance the purchase. Reach out to some of these lender for a conversation.



eLEND offers competitive rates on home loans for townhouses throughout much of the United States. eLEND is a business channel of American Financial Resources, Inc. that strives to provide affordable home financing options to first time buyers and existing homeowners.

Mecklenburg Mortgage

Mecklenburg Mortgage

Mecklenburg Mortgage serves the Charlotte and North Carolina areas. Mecklenburg Mortgage shops the market to offer clients with the best rates, lowest costs, and mortgage program tailored to fit their situation. With 13 years of experience in the mortgage industry, our loan officers walk our clients through the process from start to finish, and advise every step of the way. This eliminates the risk and guess work.

Movement Mortgage

Movement-Mortgage-logo | GRAR | Greater Rochester Association of Realtors

Movement Mortgage was created to be different. Founded in 2008, amidst one of the biggest financial meltdowns in American history, Movement set forth on a mission to create a Movement of Change in our industry, in corporate cultures and in communities.


Townhouses are easier to purchase than condos which have a much more complex process. However, there are several things to consider before buying a townhouse. Since townhouses are attached, it's crucial to look for the walls, neighborhood, and legal boundaries. A proper plan is essential to purchasing a townhouse. After all, it's not just a house; it's your home built with blood, sweat, and tears.


Jun 27, 2022

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