Should You Buy a Condo or a House?

A colorful affordable housing complex under a clear sky

When deciding whether to purchase a condo or a house, it's important to consider more than the superficial features. Purchase price, ongoing maintenance costs and lifestyle options all factor into finding the ideal place to begin home ownership. And with the average mortgage reaching $208,185 in 2020, according to Experian data, it's important to consider all your options before signing on for that loan.

A house is considered a standalone property, while a condominium is a private residence within a larger development, usually featuring attached or semi-attached units and some shared amenities (such as a pool area or parking garage). Typically, condos are smaller and less expensive to purchase than a comparable house, but a house may hold more value over time. The purchase price and ongoing maintenance costs only make up part of the factors you'll need to consider. So, let's find out which is best for you.

Is a Condo or a House More Affordable?

It's easy to assume a condo will cost you less than a house—but the ongoing costs of ownership may be more complicated than you think. Owning a house means you cover all the maintenance yourself, both interior and exterior. Landscaping, rain gutters, painting, fixing the roof, plumbing and more will be your responsibility with a house.

Condo residents typically are responsible for just the interiors of their living space—the rest is handled by a condominium board (like a homeowners association) that collects dues from residents to manage the community's upkeep, including both maintenance and amenities. Fees are usually paid on a monthly or quarterly basis, and costs can range from a few hundred dollars a month to much higher for more plush facilities.

Depending on the development, you may pay homeowners association (HOA) fees for a house as well, though this is less common. On average, a homeowner spends about $2,000 a year just on optional maintenance for their home, including things like paying for a gardener, pool service or house cleaning. Necessary maintenance costs around $1,000 or more each year, though experts recommend setting aside 1% of your home price per year for these costs just to be safe.

Another major cost consideration should be the condo's amenities themselves. You may balk at HOA fees yet find yourself spending thousands if you decide you want your own pool, a garage outfitted with gym equipment or an extensive home security system. Even some utility costs, such as water fees or garbage pickup, may be covered with condo fees—not so with a house.

Both types of property will require you to take out homeowners insurance and pay property tax. You can expect to pay around $500 a year on average for condo insurance, while homeowners insurance costs twice as much on average.

Property taxes will depend on the cost of the house or condo so are less of a contrast, but it's wise to check out the rates for any properties you look at: Some condos in a pricier part of town may require higher taxes than a house in a less desirable area. Also, a condo developer may have received tax breaks that it passed down to owners and which could end soon; check with your local assessor to find out if a particular development's taxes are expected to rise soon.

Condo or House: Which Is Better?

Choosing between a house or condo often comes down to cost and lifestyle preferences. Here's a look at the pros and cons of condo living to help you gauge the fit.

Benefits of a Condo

  • Amenities, amenities and amenities: You may pay relatively low fees but have trash pickup, reliable security and a fabulous (or even just decent) gym.
  • Less maintenance: All those amenities don't require upkeep from you. That means, unlike with a house, you don't have to deal with pool cleaning, lawn mowing or roofing issues.
  • Social proximity: Whether you are a social butterfly or would like to be, the community of a condo complex can be a plus: You can meet new friends by the pool, perhaps, or share the grill in the common area with friendly neighbors.

Downsides of a Condo

  • Condo fees: Yes, even standalone homes can be at the mercy of an HOA, but condominium dues can be steep depending on the area and amenities.
  • Privacy—or a lack thereof: Some condos provide a certain level of privacy, particularly standalone units, but it's not likely to be the same level of relative seclusion as with a traditional home.
  • Space: Houses typically have more square footage and land, such as a front and back yard, that are yours alone.
  • Restrictions: Maybe you can't hit the gym after 10 p.m. because the condo complex closes it early; or the board only allows one (small) pet per unit, so you can't bring home the Great Dane puppies you saw at the rescue shelter. Depending on your lifestyle, some community rules could feel suffocating.
  • Home renovation: The changes you make to your condo will require approval and need to stay within regulations. Sometimes that translates to not realizing the design plan you were set on.

Prepare Your Credit Before Buying a Condo or a House

As soon as you start dreaming about a big yard or that 24-hour condo concierge, it's time to think about your credit. If you start prepping early, you can secure a lower interest rate when you lock down a mortgage—and make sure that you'll qualify for the loan in the first place.

  • Check your credit score. This will give you an idea of how you'll match up with lenders—and help you gauge how much you can potentially improve your score. You can check your score for free with Experian to start.
  • Check your credit report. Review your reports from all three credit bureaus (Experian, TransUnion and Equifax) to catch any mistakes or red flags, such as high balances, that can impact your creditworthiness.
  • Don't apply for new credit. That travel rewards card might have a great mileage bonus, but applying for a new line of credit triggers a hard inquiry on your credit report, sometimes causing a temporary drop in your score. In general, it's best to wait until after you've secured a mortgage to apply for any additional credit.
  • Avoid big purchases. Your credit score suffers the most under two conditions: late payments and high balances. Paying off debt and curtailing big buys can reduce your credit utilization ratio (the percentage of total revolving credit you're currently using) for a better score. Plus, too many debts can increase your debt-to-income ratio, making you less attractive to lenders.

Start building and improving your credit at least six months before you plan to apply for a mortgage. An improved credit score could save you thousands or even tens of thousands on your mortgage, so it's worth the time and effort to improve it, even slightly. (Saving up early for your down payment can also help reduce your costs over time.)

The Bottom Line

When you're choosing between a condo and a house, you can budget and be wise with where your money goes, but the decision may come down to cost versus worth. If you're shelling out every month for a condo's fitness center that you never use, the fees might not be worth it for you. On the other hand, if the time and effort (and money) to maintain a home feels dizzying, it might be worth every penny for a condominium board to handle it on your behalf.

Either way, first crunch the numbers with our mortgage calculator and find out your creditworthiness to get an idea of what you can afford. Next, find your ideal property based on your finances and lifestyle. Then, whether you decide on a condo or a standalone house, you'll know the costs are worth it for you.