How it works
House hacking is an owner-occupancy strategy in which you buy a small multi-unit property — duplex, triplex or fourplex — live in one unit, and rent the others so tenant income pays most or all of the building's mortgage and operating costs. It is the cheapest financing door into real estate because owner-occupant loans require far less down than investor loans: 3.5% FHA or 5% conventional versus the 20–25% pure investors post. The calculator runs that arithmetic honestly. Tenant income is modeled on the non-owner units with a 5% vacancy allowance; operating costs are counted per unit across the whole building; and what remains of payment plus expenses after tenants pay their share is your effective monthly housing cost — which can even go negative, meaning the building pays you to live there. Comparing that figure against market rent for a similar unit converts the strategy into a monthly savings number, and dividing annual savings by your move-in cash gives the yield your housing offset earns. Run it before touring: the answer decides whether the listing is wealth-building or just landlord stress with extra steps.
Formula
Effective housing = P&I + opex − (units−1) × rent × 95% | Savings = market rent − effective housing | Offset yield = savings×12 ÷ cash invested
Tips
- FHA allows 3.5% down on 2–4 units if you occupy within 60 days and stay 12.
- Underwrite rents from actual listings, not the seller's pro forma — over-asked rents are the classic house-hack trap.
- Budget landlord-grade reserves even while living there; you are the super now.
- Duplexes trade richer per unit than fourplexes — compare price per unit, not sticker.
- Check zoning and lender self-sufficiency rules; some appraisers haircut rent on small multifamily.
Frequently asked questions
- Is house hacking really worth it?
- Run the offset: on a $360,000 duplex with 5% down at 6.75%, one $1,450 tenant covers roughly 62% of payment plus operating costs, cutting housing to about $780 a month versus ~$1,450 renting. That banks around $8,000 a year plus principal paydown and appreciation on a $360,000 asset for $21,600 invested.
- How much money do I need to start house hacking?
- Down payment plus 3% closing costs plus reserves. On a $360,000 duplex at 5% down that is about $28,800 all-in. FHA drops the down payment to $12,600 at 3.5% but adds mortgage insurance. Most successful hacks also carry three months of payments in reserve beyond closing day.
- Does living next to tenants cause problems?
- Sometimes — noise, shared walls, after-hours maintenance calls are real. Mitigations that work: separate meters where possible, a written lease identical to any arm's-length tenancy, and choosing buildings where units do not share HVAC or entrances. Many operators say the first year tests boundaries; the lease does the enforcing so friendship never has to.
- What happens when I move out of my house hack?
- The unit you occupied converts to a fourth income stream, turning the property into a full investment. Most loans let you convert after twelve months of occupancy; renters then cover roughly the entire payment. Keep records of occupancy — moving out at month two invites occupancy-fraud questions if the loan is ever audited.
- Is a duplex or fourplex better for house hacking?
- Fourplexes usually win on math: three tenants rather than one means more income diversification and often a lower per-unit price. Duplexes win on livability and lender appetite. The calculator handles either — enter the unit count and watch effective housing cost fall as tenants multiply.