How to Buy a Condo for the First Time

Thinking about buying a condo for the first time? Buying a condo be a smart decision if you want to own a property without all the maintenance that comes with a single-family home. But there are a few things you need to understand about how to buy a condo before you start shopping for your dream condominium.

We'll cover everything you need to know about how to buy a condo for the first time, how much it costs, and how it compares to buying a house. We’ll also outline the red flags to watch for, options to buy a condo with little or no money down, and whether a condo is right for you.

How to buy a condo—how different is it from buying a house?

The process of buying a condo is pretty similar to that of buying a home. Just like with buying a single-family home, you need to get preapproved for a mortgage, shop around for the unit, make an offer, conduct inspections, and close on the purchase. 

But here's where buying a condo is different:

• You’re buying a unit inside a building, not a standalone structure. You'll need to consider the building as well as the condo itself.
• You’re also responsible for the homeowners association (HOA) monthly fees. There may be rules and restrictions around pets, renovation, renting, and resale as well.
• The condo may be more difficult to qualify for with financing since lenders will reviews the entire condo association for financial viability, not just the condo itself.
• Condos generally appreciate more slowly than single-family homes.
• You'll need to buy a different type of home insurance policy than you would with a single-family home.

How to know if you're buying a good condo

Here’s the truth nobody tells first-time condo buyers: understanding the HOA is as important as liking the unit. That’s why you need to look at the HOA fineprint closely.

• Review the financial statements to ensure the HOA has enough in reserves for repairs.
• Request recent meeting minutes to get insight into ongoing issues with the property, like complaints about maintenance or financial disputes.
• Take a closer look at the bylaws and CC&Rs (Covenants, Conditions, and Restrictions). These are the rules and regulations governing the condo, including the responsibilities and restrictions of unit owners.
• Check the article of incorporation that establishes the condominium association as a nonprofit entity.

You don’t want to be a homeowner with regrets. Here are red flags to watch for before buying a condo:

• Low reserves: The HOA should have funds set aside (often called reserves) for major repairs, such as roof replacement, elevator upgrades, or parking lot resurfacing. If the reserves are too low, you could get a special assessment—a one-time fee unit owners must pay.
• Lawsuits: If the HOA has ongoing or pending lawsuits, that’s a red flag. Whether they’re suing a contractor or someone is suing them, it can affect their financing. Some lenders don’t approve loans on properties with active lawsuits, even minor ones.
• High delinquency rates: If you see a notice that residents aren’t paying HOA fees, steer clear of that building. When too many people aren’t paying their HOA fees, the financial stability of the association becomes weak. 
• High turnover: If the condo building has a higher vacancy rate than the average for the area, it could mean a lot of things, such as outdated units or undesirable amenities. 
• Poor maintenance: Is the landscape in shape? Are the hallways clean? Is the pool well-kept? If everything looks messy, it could be a sign that the HOA isn’t managing things well or they have low reserves.

Working with a real estate agent can help you spot such red flags. Those who specialize in condo sales will know what questions to ask—and what properties to avoid. 

What does it actually cost to buy a condo? 

The average cost of a condo in the U.S. is $371,300, versus $427,800 for single-family homes, according to the National Association of Realtors (NAR).[1] However, these costs vary significantly depending on the location and condo size. In major metropolitan areas like San Francisco, Los Angeles, and New York, for example, condo prices are relatively high but still more affordable than single-family homes in those areas.

Like buying a home, you need a down payment, which typically ranges from 3% to 20% of the purchase price. Depending on the loan type you qualify for, you may be able to put as little as 3% down on the condo’s purchase price or you can look into mortgages where you can buy a house with no money down. If you're a first-time homebuyer, you can also explore local grants that can help with your down payment.

There are also monthly HOA fees, which catch many people off guard. This is a monthly fee paid by residential property owners to their homeowners association. The fee helps fund the maintenance, repairs, and improvements of the shared amenities within a community. The average HOA fees in the U.S. range from $300 to $400 per month but can go as high as $1,000, depending on the property and the amenities it offers.[2]

When you close on a condo, you’ll pay 2%–5% of the purchase price in closing costs. This often covers things like loan origination fees, title insurance, appraisal, and home inspection.

What exactly do you own when buying a condo? 

When you buy a house, you own it and the land it sits on. But when you buy a condo, you own a unit inside another building and share ownership of common areas within the property. You’ll be responsible for maintaining everything inside your four walls, while the HOA takes care of the rest. 

Every condo community is different, but the HOA is usually responsible for:

• Common area maintenance like hallways, elevators, sidewalks, pools, clubhouses, and gyms 
• Maintaining the exterior of the structure, including the walls, roofs, and sidings
• Upkeep on limited common areas, such as patios, private entryways, and garages
• Landscaping and snow removal
• Insurance for the building (you’ll still need your own condo insurance)
• Managing finances for the community

HOA responsibilities vary by complex, so always review the HOA documents before buying a condo. Overlooking this step might cost you later, especially if the HOA raises fees or delays repairs in common areas.

While buying a condo comes with several benefits, like not having to deal with much maintenance and repairs, it comes with trade-offs, too. Some condominium communities have restrictions when it comes to resale, renovation, number of guests, renting, noise, and even owning pets.

Is buying a condo for the first time a good idea?

Buying a condo is a smart option for first-time home buyers looking for a more affordable path to homeownership. Just keep in mind that you’ll only own a unit in the property, share common areas, and have to pay monthly HOA fees and you might be subject to more restrictions on what you can do with the condo than you would be with a single-family home.

If you need help with the entire process, a Clever Real Estate agent can help you find the right condo, negotiate a better price, and potentially get a home buyer rebate to help with your closing costs. Get your free matches with the best Clever agents near you.