The 7 Types of Homes (plus homebuyer tips)

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Knowing the 7 types of homes can:

- Save you money.

- Make you money.

- Help you buy the right home for you.

Unfortunately, most people don't know the different options.

 

The Choices

 

According to Zillow, most first-time homebuyers do this:

- 85% buy a house.

- 10% buy a condo.

- 5% buy something else.

 

The truth is.

There's many options when buying a home.

And most people don't know all of the different options.

I sure didn't.

 

But knowing the options you have when buying a home can be a massive money-saver.

 

 

Getting a home loan pre-approval to buy my first home was exciting.

And scary.

After giving the loan officer my tax returns, bank statements and a recent paystub.

 

I figured the outcome would be one of these 3 things:

1. The loan officer would tell me I couldn't get a loan.

2. The loan officer would tell me I could get a loan to buy a house.

3. The loan officer would tell me I could get a loan to buy a condo.

After anxiously waiting for a day or two.

The loan officer called with an answer.

 

The Options

 

My loan officer said working a 9-5 job helped qualify me for a home loan.

But I didn't make enough money to get a loan to buy a house.

Although, I did make enough money to get a loan to buy a condo.

 

At the time I was thrilled.

And to be honest, I was a bit surprised I qualified for anything.

Because I didn't have much money saved.

 

But he assured me getting a home loan was possible.

And a few months later I found myself moving into a tiny condo with a friend on the outskirts of Seattle, Washington.

 

The 7 Types of Homes

 

Over the next decade, I got more home loans to buy 3 condos and 4 houses in total.

Which feels strange to say after starting from scratch in the beginning.

 

Watching hundreds of people buy homes while working in banking helped me learn a lot about home buying.

Things I wish I knew from the very start.

 

So, here's 7 different types of homes worth knowing (plus some homebuyer tips to help save money).

Let's dive in.

 

1. The Condo

 

A condo can be the least expensive home to buy.

According to Nerdwallet, the average monthly condo payment is $400 less than the average monthly house payment.

 

Condo which is short for "condominium", is also 50% smaller than a house on average.

Condos can resemble an apartment complex and often come with additional perks like a swimming pool or a gym.

 

^Condos

Buying a condo means owning a smaller unit inside a large building.

And paying monthly HOA Dues.

Which stands for Home Owners Association.

 

The Home Owners Association is normally run by people who live in the condo complex.

And people that choose to live in a condo complex are expected to pay the monthly HOA Dues.

The dues help cover expenses to run the condo complex like insurance, repairs, cleaning the common areas, landscaping, etc.

 

HOA Dues on average cost $300 to $500 per month depending on the complex.

Buying a condo often means you have a smaller living space and a lower monthly payment than a house, but also means you must pay the monthly HOA Dues.

 

TIP: Buying a 2 bedroom condo and renting out the 2nd bedroom is sometimes less expensive per month than buying just a 1 bedroom condo (if you don't mind sharing your living space).

 

2. The Townhouse

 

A townhouse is often bigger than a condo, but smaller than a house.

Townhouses are usually 2 or 3 stories tall.

And most have monthly HOA Dues, just like a condo.

 

^Townhouses

Sometimes you can find a townhouse that does not have monthly HOA Dues.

Which means insurance, repairs, landscaping, etc. all become the homeowner's responsibility since there is no Home Owners Association.

Buying a townhouse can give you more space than a condo but less space than a house.

 

TIP: Many townhouses have a small yard which can make owning a pet lots easier than owning a pet inside a condo.

 

3. The Pud

 

A Pud is like a mini-town.

It stands for Planned Urban Development.

And often includes many similar looking homes.

 

^Puds

A Pud community normally has monthly HOA Dues just like a condo.

But the monthly HOA Dues can be 30% to 50% less expensive than a condo.

Buying a Pud often means having more living space than a condo and may come with a front yard and back yard.

 

TIP: Sometimes a Pud can be less expensive than buying a regular house.

 

4. The House

 

A house is the most common type of home.

And they offer the most flexibility.

Most houses are around 1,800 square feet on average.

 

^House

One big perk of owning a house is having total control:

- Painting it any color you want.

- Designing the yard any way you want.

- Adding on an extra bedroom if you want.

Buying a house gives you the most flexibility to do whatever you wish with your home.

 

TIP: There's several ways to make extra money with a house as well like: Putting a tiny home in the back yard to rent out OR using the garage as an extra bedroom with a separate entrance to rent out (if you want).

 

5. The Duplex

 

A duplex is like buying a house, plus a rental property.

A duplex often means owning one large building.

A building that includes 2 separate areas, for 2 separate families to live.

 

^Duplex

Buying and living in a duplex often means renting out 1 unit to help cover your monthly home loan payment.

 

TIP: A duplex can cost more than a regular house but many loan officers can use the expected rental income you'll get from the extra unit to help qualify you for a duplex home loan.

 

6. The Triplex

 

A triplex is like buying a house, plus two rental properties.

A triplex often means owning one large building.

A building that includes 3 separate areas, for 3 separate families to live.

 

^Triplex

Buying and living in a triplex often means renting out 2 units to help cover your monthly home loan payment.

 

TIP: A triplex can cost more than a regular house but many loan officers can use the expected rental income you'll get from the 2 extra units to help you qualify for a triplex home loan.

 

7. The Fourplex

 

A fourplex is like buying a house, plus three rental properties.

A fourplex often means owning one large building.

A building that includes 4 separate areas, for 4 separate families to live.

 

^Fourplex

Buying and living in a fourplex often means renting out 3 units to help cover your monthly home loan payment.

 

TIP: A fourplex can cost more than a regular house but many loan officers can use the expected rental income you'll get from the 3 extra units to help you qualify for a fourplex home loan.

 

The bottom line

 

That's a lot of different homes to consider.

Which can feel a bit overwhelming at first.

To rank these from least expensive to most expensive monthly payment.

I've found the options generally look like this.

 

Least expensive to most expensive:

- Condo

- Townhouse

- Pud

- House

- Duplex

- Triplex

- Fourplex

Of course it can vary a lot depending on the state, city or neighborhood where the home is located.

 

One nice thing about the duplex, triplex, or fourplex options is having renters help cover the monthly payment (for a homebuyer who doesn't mind being a part time landlord).

But for home buyers who want to slowly ease their way into homeownership.

I've found a condo to be a great place to start.

Some ground floor condos even have a tiny yard for the kids and the pets to use (if needed).

Hope this little cheat sheet is helpful if you see home buying in your future.

That's all for today.

See you next Saturday.