Co-op Vs. Condo: Differences, Advantages and Disadvantages

What is the difference between a condo and a co-op?

The main difference between condos and co-ops comes down to who owns the property. If you live in a condominium, you own your individual unit. If you live in a co-op, you own shares in a corporation that owns the building. As a co-op owner, you do not own the unit. Instead, you own the right to live in the building and be part of the community that runs it.

This difference in ownership can lead to further disparities between co-op and condominium living. Here are a few other ways these house types can differ:


Co-ops are better suited to short-term residents, while condos are better suited to those looking for something longer term. Indeed, buying a condo is a form of real estate investment and each of your monthly payments will help you build capital over time.

Co-ops can have high down payments depending on where you are, ranging from 20% to 30% in popular cities. However, The Washington Post found that most co-ops tend to be cheaper than condos per square foot. Another trade-off is that co-ops tend to have lower closing costs than condos, since you won’t have to pay for things like title insurance.

At a glance, condominiums may appear to have cheaper monthly payments than co-ops. However, co-op payments are generally more expensive and cover things like utilities, building maintenance, and other costs that aren’t rolled into the monthly payment for a condo. Remember that with a co-op, you may be asked to help with the general upkeep of the building, including common areas or updates.


It’s common for condo dwellers to answer to a condo association, which, much like a homeowner’s association (HOA), creates and maintains community guidelines. Ultimately, however, the occupants of a condo have ownership of their unit, which gives them the freedoms that a typical homeowner has, such as the ability to renovate.

Co-op residents, on the other hand, only pay for the right to live in the building. Since co-ops are collectively owned, any changes a resident hopes to make will have to go through the shareholders for approval. Most co-ops also hire a management company or assemble a board of shareholders to make decisions and carry out day-to-day tasks. This includes collecting fees and managing common areas.

By nature, cooperative communities are usually tightly knit. While this is great for camaraderie, it can make the approval process to enter co-op daunting or time-consuming. Also, if you want to make any changes to your living space, you will need permission before doing so.


If you’re looking for a community with lots to do, a condo is probably the best fit for you. Condos tend to offer residents a wider range of amenities. Here are some of the most common:

  • Pool access
  • Roof terrace or lounge area
  • Gym
  • Recreational sports fields and fields
  • Event space

This does not mean, however, that cooperatives do not bring anything to the table. Many co-ops also offer shared spaces for residents – game rooms and lounges being among the most common. And with a co-op, you’ll also have peace of mind that your fellow citizens are equally invested in the preservation and upkeep of the building and community spaces.

It is also common for condos and co-ops to have some sort of front desk service and third-party security to keep residents safe.


If you’re looking to get into real estate investing and think subletting might be something you’re interested in, co-ops aren’t the best fit. Most co-op boards do not allow subletting, and those that do generally allow it only in very specific circumstances.

Condos, however, are a great option for buyers looking to generate passive income by renting out their home. Condominium associations very rarely have rules against subletting because it is, after all, your property.


At first, the mortgage approval processes for co-ops and condos seem quite similar. You need to get loan approval and choose your lender. Your lender must then review the property you wish to finance to ensure that it meets criteria such as construction status and occupancy requirements. Only then will your lender move forward with approving a mortgage.

But when it comes to moving into a co-op, there are a few extra steps regarding eligibility. Not only is it more difficult to obtain financing for this type of housing, but you will also have to go through the approval process put in place by the board of directors of the building you are interested in. This involves a thorough application process, interview and getting board approval before being allowed to buy shares in the co-op.


While condos are widely available in cities and suburbs, co-ops are a little harder to find. Most often located in densely populated cities and metropolitan areas, co-ops may not be suitable for buyers seeking a more pastoral lifestyle.


Since a condo is considered real estate, most lenders aren’t afraid to work with borrowers looking to finance one. For this reason, the process of buying a condo is almost identical to buying a house. Here are the types of mortgages generally available for condos:

  • Conventional
  • FHA
  • USDA
  • Virginia

Financing a co-op, however, is where it gets tricky. Not only are lenders hesitant to take out cooperative loans, but the cooperatives themselves may have strict rules when it comes to financing. Depending on how you plan to fund, the co-op’s board may declare you ineligible.

Also, when the time comes for you to leave the co-op, it can be difficult to find someone to sell your shares to. Even if you find an interested buyer, they still need to get approval from the co-op’s board before they can sell.

James V. Hayes