House Hacking Guide
House hacking means buying a home, living in part of it, and renting out the rest so your tenants help pay your mortgage. It's one of the lowest-cost ways to start investing in real estate.
Ways to house hack
- Duplex, triplex or fourplex: live in one unit and rent the others
- A house with extra bedrooms: rent rooms
- A basement or garage apartment, where local zoning allows it
- Live in it for a while, then move out and rent the whole place
Why people do it
- Lower down payment than an investment property loan
- Tenants help pay your mortgage
- You learn to be a landlord while you live there
- You build equity while you save
Set your goal
Decide what you want the tenants to do: cover part of your mortgage, cover all of it, or let you live nearly free. Your goal decides what kind of property to look for.
Get pre-approved for an owner-occupied loan
Tell your lender you plan to live in the home and rent part of it. Owner-occupied loans can allow a much lower down payment than investment loans, and lenders may count some of the expected rent toward your income. Rules differ for 2 to 4 unit homes, so ask what you qualify for.
Find the right property
Look at duplexes, triplexes and fourplexes, or a house with extra bedrooms or a basement or garage apartment. Check recent rents nearby, look for good privacy between units, and check the condition.
Run the numbers
Add up your mortgage, taxes, insurance, repairs and vacancy, then compare that to the rent you can expect. A good house hack has the rent covering a big part of your housing cost.
Rent it right
Screen your tenants, use a solid lease, and handle repairs fast. Learn the landlord rules before you rent, or hire a property manager.
Move on and keep it
After you've lived there as long as your loan requires, you can buy your next home and keep this one as a rental. That's how one house hack becomes a portfolio.
Watch out for
- You live next to your tenants, so privacy and noise matter
- Vacancies and repairs are on you
- Owner-occupied loans require you to actually live there, usually for at least a year
- Zoning, short-term rental and landlord rules vary by town
Run your numbers with the calculator →
This guide is general information, not financial, legal or tax advice. Loan rules change. Talk to your lender and your CPA about your own situation.
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