The Taberne Group — Powered by Movement Mortgage
Back to Blog
Buying6 min readFebruary 27, 2026

Condo vs. Townhouse: Mortgage Differences in PA and NJ

Same Budget, Different Options

Condos and townhouses are both popular choices for first-time buyers, downsizers, and anyone who wants to own without maintaining a large property. But from a mortgage perspective, they're very different. Understanding these differences can save you time, money, and headaches.

Ownership Structure: The Fundamental Difference

Condos

When you buy a condo, you own the interior of your unit and a share of the common areas (hallways, gym, pool, exterior, roof). The condo association (HOA) owns and maintains the building structure and shared spaces.

Townhouses

When you buy a townhouse, you typically own the structure and the land it sits on. Some townhouse communities have HOAs for shared amenities, but you own the building itself.

This distinction affects your mortgage in several important ways.

Condo Mortgage Requirements

Lenders don't just evaluate you when financing a condo — they also evaluate the condo project (the entire building or development). This adds extra requirements:

Condo Project Approval

For conventional loans, the condo project must meet guidelines set by Fannie Mae or Freddie Mac. Key requirements include:

  • At least 50% owner-occupied (not investor or second home units)
  • No single entity owns more than 20% of the units (prevents developer control)
  • HOA reserves must be adequately funded (typically 10%+ of the annual budget)
  • No active litigation against the HOA
  • Insurance coverage that meets lender requirements
  • Commercial space must be limited (typically under 25-35% of total area)

    • FHA Condo Requirements

    FHA has its own approved condo list. The project must be FHA-approved or qualify for a Single Unit Approval (SUA). You can check the HUD condo approval list at hud.gov.

    Key FHA requirements:

  • At least **50% owner-occupied**
  • No more than **50% FHA-insured** units in the project
  • Project must carry adequate insurance
  • HOA must be financially stable

    • What Happens If the Condo Isn't Approved?

    If the condo project doesn't meet conventional or FHA guidelines, your options become limited:

  • Portfolio loans — Some lenders hold these loans in-house with different guidelines
  • Higher down payment — Non-warrantable condos may require 20-25% down
  • Higher interest rates — Expect 0.25-0.75% premium
  • Walk away — Sometimes the condo just isn't financeable

    • Townhouse Mortgage Requirements

    Townhouses are generally financed the same as single-family homes. Because you own the structure and land:

  • No project approval required (in most cases)
  • All loan types available — FHA, VA, USDA, conventional, jumbo
  • Standard down payment options — 3-3.5% minimum
  • No additional documentation about the development

    • This makes townhouses significantly easier to finance than condos.

    HOA Fees and Your Mortgage

    Both condos and townhouses may have HOA fees, but they differ significantly:

    Condo HOA Fees

    Typical range in PA/NJ: $200-$600+/month

    Usually includes:

  • Building insurance (exterior/structure)
  • Maintenance of common areas
  • Trash removal
  • Water/sewer (sometimes)
  • Amenities (pool, gym, concierge)
  • Reserves for major repairs

    • Townhouse HOA Fees

    Typical range in PA/NJ: $50-$250/month

    Usually includes:

  • Landscaping and snow removal
  • Shared amenity maintenance
  • Common area insurance
  • Sometimes exterior maintenance

    • Impact on Your Mortgage

    HOA fees are included in your DTI calculation. A $400/month condo HOA reduces your buying power by roughly $60,000-$70,000 compared to a townhouse with a $100/month HOA.

    Insurance Differences

    Condo Insurance

    You need an HO-6 policy (walls-in coverage) that covers:

  • Your personal property
  • Interior fixtures and upgrades
  • Liability
  • Loss assessment (if the HOA's insurance doesn't fully cover a claim)

    • Typical cost: $300-$600/year

    The HOA's master policy covers the building structure and common areas.

    Townhouse Insurance

    You need a standard homeowners policy (HO-3) that covers:

  • The entire structure
  • Personal property
  • Liability
  • Other structures (if applicable)

    • Typical cost: $1,000-$2,000/year

    While townhouse insurance costs more, you have complete control over your coverage.

    Resale and Appreciation

    Condos

  • Appreciation typically **lags behind** single-family homes and townhouses
  • HOA financial health and special assessments can impact value
  • Rental restrictions may limit your buyer pool
  • Market for condos is more sensitive to interest rate changes

    • Townhouses

  • Appreciation typically **tracks closer** to single-family homes
  • More appeal to families (multiple floors, private entry)
  • Fewer restrictions on renting or selling
  • Land ownership adds inherent value

    • Making Your Decision: A Comparison

    Where to Look in PA and NJ

    Best condo markets:

  • Center City Philadelphia, Rittenhouse Square
  • Hoboken and Jersey City
  • King of Prussia and Conshohocken
  • Cherry Hill and Haddonfield

    • Best townhouse markets:

  • Fishtown and Northern Liberties (Philadelphia)
  • Bucks County new construction
  • Mount Laurel and Moorestown (NJ)
  • West Chester and Exton

    • Let Us Help You Compare

    Whether you're leaning toward a condo or townhouse, The Taberne Group can pre-approve you for either and help you understand the financing differences for any specific property. Call us at (215) 266-0663 or start your application at movement.com. We serve homebuyers across Pennsylvania and New Jersey.

    Ready to Take the Next Step?

    Get pre-approved in as little as 24 hours. The Taberne Group is here to help.

    Apply Now(215) 266-0663
    PreviousNext
    Call NowApply Now