The classic image of the American Dream may include a freestanding house (with or without a picket fence), but for a significant number of Americans, condominiums are home sweet home. City residents, singles, couples, seniors and others may find this type of homeownership to be the best fit for their needs and budget. Condos commonly offer affordability, low maintenance and shared amenities, and they may be used as first homes and downsize homes as well as lifelong residences. This is a brief overview of what condo ownership entails.

A condo defined

A condominium (condo for short) is a specific form of homeownership. Owning a condo means owning a “unit” within a larger building or community along with other condo owners. Condos are a type of ownership, not a type of property, and can include everything from high-rise apartments to townhomes to “detached condominiums” that resemble single-family homes. Condo owners have joint ownership of the exterior property and common areas of the community. Condominium communities may also provide shared amenities and services to their residents. Governance of this arrangement is handled by an association, such as a homeowner’s association (HOA). To cover the cost of maintaining the shared property, providing amenities and services and building up reserves for future expenses, condo owners pay a regular fee to the association known as an assessment or dues.

Condos and homeownership

Even if some condos may resemble rental apartments in appearance and lifestyle, owning a condo means owning a home. As such, condo owners have many of the same benefits and responsibilities of other homeowners. Condo owners, for instance, may be able to renovate and improve their units, lease out their homes for rental income, claim mortgage interest deductions on their taxes* or sell their homes for a return.

Condos and community ownership

Conversely, owning a condo has several key differences from owning a single-family home. In addition to sharing in the expenses and responsibilities of the association’s shared property and services, the community and its residents must also follow a set of bylaws that govern how the association is managed and what conduct is allowed by owners. Remodeling, leasing, parking, pet ownership and more may all be subject to these rules. The functions of the association are managed by a board of directors elected by the condo owners. Because of these responsibilities and restrictions, it’s important to research a condo community’s current rules, fees, condition, situation and plans to fully understand how you may be affected by buying into the community.

Financing a condo

Obtaining a mortgage for a condo is similar to obtaining one for a single-family home. In both cases, the lender will look at your credit history and finances to determine how well you can afford the costs of a mortgage and the related expenses for your desired home. With a condo, this means your HOA dues are considered along with your mortgage payment, insurance and property tax expenses when assessing if you qualify for a mortgage. Your lender may also examine the financial and governance strength of the condo association itself.


If you think a condo might be right for you, there’s more to know before you begin your home search. Contact your real estate and mortgage professional for advice on how to proceed.

*Draper and Kramer Mortgage Corp. does not provide tax advice. Please consult with your tax advisor for any tax-related matters.