Should Your First House Be a Condo?

What Is a Condo?

A condominium, or condo, is a private home inside a larger property, typically attached or semi-attached to other units. Similar to apartment complexes, condominium developments often feature shared amenities such as swimming pools, community rooms, tennis courts or parking garages. Condos may look similar to apartments, but unlike rental life, you own your home and have the opportunity to build equity as its value appreciates.

Homeowners association (HOA) fees from residents pay for the property's amenities and general maintenance of the complex's exterior and shared spaces. In addition to HOA fees, which are typically paid monthly or quarterly, you're responsible for your mortgage and property taxes, as well as maintaining the interior of your unit. Your mortgage lender will generally require you to buy condominium insurance; your HOA may require this as well.

Learn more: What Are Homeowners Association (HOA) Fees?

Pros and Cons of Buying a Condo

Purchasing a condo as your first home has both benefits and downsides.

Learn more: Should You Buy a Condo or a House?

Should Your First House Be a Condo?

Here are some factors to think about when considering a condominium as your first home.

When to Consider Buying a Condo

It could make sense to get a condo as a first home if:

• You're on a tight budget. Buying a condo can give you entry to homeownership for less than a house.
• You don't want to worry about maintenance. If you'd rather not deal with mowing lawns or repairing roof leaks, a condo could be perfect for you.
• You travel frequently. Security features and proximity to neighbors mean fewer worries about leaving your home empty when you're out of town.
• Your space needs are minimal. Depending on your lifestyle, even a smaller condo might offer plenty of space.
• You want amenities. A condo can combine the amenities of an apartment building with the satisfaction of homeownership for the best of both worlds.
• You prefer urban living. Want to live in a walkable, bustling urban environment? You're more likely to find condos than houses there.
• You don't mind following rules. If you're happy to comply with regulations like uniform paint colors and quiet hours, a condo could be ideal.
• You want community. Condo living can offer built-in opportunities for socializing and getting to know your neighbors.

When to Avoid Buying a Condo

You might want to steer clear of a condo if:

• You have children or plan to grow your family. Condominiums' noise restrictions and space limitations mean they're not always ideal for lively children.
• You have large pets or lots of pets. Condos may limit the size or number of pets you can own. Without a fenced yard, your pets may not get enough exercise.
• You don't want to pay HOA fees. If you prefer to control how much money you spend maintaining your property, a condo might not be for you.
• You don't want to share a wall with neighbors. Noisy neighbors or neighbors who complain about your slightest sounds could make life in a condo very unpleasant.
• You prefer to keep your distance. Condo living requires rubbing shoulders with neighbors, so it may not be the best fit for those who want solitude.
• You don't want to follow rules. If you love throwing loud parties and have always dreamed of painting your house purple, you probably aren't suited for condo life.
• You want to rent out the property. HOA rules may not allow renting your unit; if they do, the board will generally need to approve the tenant, and may require a fee or a tenant interview.

Learn more: What to Look for When Buying a House

Tips for Buying a Condo

When shopping for a condo, follow these steps to help you find the right match.

• Consider all costs. These include your mortgage, property taxes, HOA fees, condo insurance and the cost of maintenance for the inside of your home. Use a mortgage calculator to see how much you can afford.
• Read HOA documents. Review the HOA rules, check the size of the reserve fund, see who manages the property and look for any planned increases in fees. The minutes of HOA board meetings can give you insights into potential problems.
• Investigate litigation. Lawsuits against the condominium association could negatively impact your property or make it harder to get a mortgage. Check and see if there are any pending filings or past cases.
• Ask about special assessments. Upcoming special assessments could pose a financial burden after you've just purchased a home.
• Enlist an experienced real estate agent. Working with a real estate agent knowledgeable about condominiums can help the process go smoothly.
• Get prequalified for a mortgage. Prequalification isn't a guarantee of approval, but can provide an idea of how much you can borrow. A mortgage broker can guide you through the process and help you compare loan offers from different lenders.

Learn more: The Ultimate Guide for First-Time Homebuyers

The Bottom Line

Depending on your needs, budget and preferences, a condo could be the ideal first home for you. As you consider your housing options, know that you generally need a credit score of 620 or more to qualify for most mortgages. A higher score could translate to a lower interest rate, saving you tens of thousands of dollars, so it's worth making an effort to improve your credit score.

Start getting your credit ready for a mortgage at least six months before you start condo-hunting. Begin by checking your credit report and credit score to see where things stand. To help improve your score, focus on paying down debt to reduce your credit utilization, making payments on time and avoiding applications for new credit. Free credit monitoring from Experian can help you keep tabs on your credit as you travel the road to condo ownership.