HOUSE HACKING
House hacking: you live in one home and the others pay you rent.
Picture a house with a small second home in the backyard, an ADU. You own both. You live in one and rent out the other. A duplex, a triplex or a fourplex works the same way. An ordinary home loan buys it, as long as you live there, and the lender counts the rent when you qualify.
Free. No credit pull.
THE RULE
Live in it, and the lender calls it a home.
FHA, VA and conventional loans all draw the same line. A building with up to four units is a home when the buyer lives in one of them. Do not live there, and it is financed as a rental, typically at about 25% down. A building with five or more is commercial property, and none of the loans on this page reach it.
The same rule counts the rent. Lenders count 75% of the rent from the units you will not live in toward what you qualify for. If the other home rents for $1,650 a month, about $1,240 of it counts. The rent comes from the appraiser's rent schedule. Where a lease is in place the lender looks at both, and FHA uses the lower of the two.
None of this is a secret. The rule has been in the published loan handbooks for decades.
The least each loan asks down, if you will live there.
- VA 0% down
- For eligible veterans and service members with full entitlement. No monthly mortgage insurance. A one-time funding fee of 2.15% on first use applies unless you are exempt.
- FHA 3.5% down
- Credit scores from 580. Mortgage insurance of 1.75% of the loan up front and about 0.55% a year. A three or four unit home also goes through the FHA self-sufficiency test.
- Conventional 5% down
- Credit scores from 620. No self-sufficiency test. Mortgage insurance with less than 20% down.
- Conventional, on a house with an ADU 3% down
- A house with an ADU is financed as a single-family home, so the single-family minimum applies.
These are program minimums. Your down payment, rate and approval depend on your credit, your income, the property and the lender.
See each loan in plain termsTHE MATH
What house hacking costs each month.
Take a $480,000 duplex in Texas where the other home rents for $1,650 a month. At 20% down, living there costs about $1,850 a month after the rent. At 5% down it costs about $2,460. Put less cash in and you pay more each month.
The rent also changes what you qualify for. With no rent counted, a lender would look for about $90,200 a year of income at 20% down. With the rent counted, the figure is about $75,300.
Get rich slow: what this home builds in ten years, and what could wreck it.| Each month | 20% down | 5% down |
|---|---|---|
| Loan paymentprincipal and interest | $2,204 | $2,618 |
| Mortgage insurance | $0 | $190 |
| Property tax | $603 | $603 |
| Insurance | $424 | $424 |
| Repairs, set aside | $190 | $190 |
| Empty-unit allowance | $83 | $83 |
| Going out each month | $3,504 | $4,108 |
| Rent from the other home | -$1,650 | -$1,650 |
| What you pay to live there | $1,854 | $2,458 |
| What it takes to get in | ||
| Cash to closedown payment plus closing costs | $108,000 | $36,000 |
| Income to qualify, a yearwith the rent counted | $75,300 | $92,200 |
| Income to qualify, a yearwith no rent counted | $90,200 | $107,000 |
What this assumes.
A 30-year fixed loan at 5.6%, the rate this site prices a duplex at today (6.0% for other homes). Property tax of about $7,240 a year: 1.8% of the price, less the $140,000 Texas school homestead exemption. Insurance of about $5,090 a year, from this site's Texas rate model. Mortgage insurance at 0.5% of the loan a year with less than 20% down. Repairs set aside at 11.5% of the rent, and 5% of the rent for an empty unit. No HOA dues and no owner-paid utilities. Closing costs budgeted at 2.5% of the price. Income figures use a 43% debt-to-income limit, count 75% of the rent, and assume no other monthly debts.
This is arithmetic on an example, not a loan offer or a rate quote. A real offer comes in writing, as a Loan Estimate with its own rate, APR and closing costs.
THE WORK
You will be somebody's landlord.
You live there, and you plan to stay. Lenders expect you to move in and live there, typically for at least a year, and you sign that at closing. The costs of buying take time to come back, and a small down payment means a large loan: if prices fall you can owe more than the home is worth.
Units sit empty. Things break. The numbers on this site take 5% off the rent for a month between tenants and set aside 10 to 14.5% of the rent for upkeep, more on older homes. A repair comes as one bill, the way a water heater does. Keep enough in the bank to carry a full month on your own.
Keep savings after closing. Plan for reserves in the bank after closing: three months of payments with FHA on a three or four unit home, and six with a conventional loan on any home with two to four units.
You are the landlord. Your tenant lives on your lot. You choose the tenants, collect the rent, and take the call when something breaks, or you pay a manager to.
We go through each one with you on the home you choose. If one is not in place yet, you get a plan to get there.
THREE STEPS
How to start house hacking.
- 01
Get your number.
A few questions take about two minutes, and there is no credit check. You get a price range with the rent counted and the loans that reach you. It is an estimate, not a pre-approval.
See what you qualify for - 02
Look at real homes.
Every listing here shows what it costs to live there after rent, and the income it takes to qualify. Start with a city.
- 03
Send us the one you like.
Give us the address. We tell you which loan fits and what the home costs to live in each month.
Send us an address
The longer reads are free on this site.
Is house hacking legal?
Yes. Living in one unit of a home you own and renting out the others is ordinary landlording, and the loans on this page are written for it. What the loan asks is that you live there. Cities and homeowner associations can have their own rules about renting, so check them for the address before you buy.
Can a first-time buyer buy a house with an ADU or a duplex?
Yes. Either one is a home when you live in it, so a first-time buyer uses the same FHA, VA and conventional loans they would use on any house. The difference is that rent from the other home can help you qualify. We check the home and tell you which loan fits before you offer.
See what you qualify forHow much cash do I need to buy a house with an ADU or a duplex?
Plan for three things: the down payment, closing costs, and on some loans a few months of payments left in the bank after closing. On a $500,000 duplex, 3.5% down is $17,500 and 5% down is $25,000. This site budgets closing costs at 2.5% of the price, which is $12,500 here.
What credit score do I need to buy a house with an ADU or a duplex?
Conventional loans start at 620. FHA starts at 580 with 3.5% down, or 500 to 579 with 10% down. VA sets no official minimum, though lenders set their own, commonly about 580. Any lender can set a higher bar than these.
What is the FHA self-sufficiency test?
It is FHA's rent check for three and four unit homes. Take 75% of the market rent for every unit, including the one you will live in. That figure has to cover the full monthly payment: principal, interest, taxes, insurance and mortgage insurance. A duplex has no such test, and neither does a conventional loan at 5% down. You can run it on any home with the calculator on this site.
Run the test on a homeWhat is an ADU, and can I house hack a house that has one?
An ADU is an accessory dwelling unit: a second, smaller home on the same lot as a house, such as a garage apartment or a backyard cottage. You can live in one and rent the other. A house with an ADU is financed as a single-family home: 3% down on a conventional loan for a first-time buyer, 5% otherwise, 3.5% with FHA. FHA counts rent from one existing ADU. Conventional loans count it in narrower cases, so which loan you use matters. Send the address and we check it before you offer.
Do I need landlord experience to buy a house with an ADU or a duplex?
No. It can be the first rental you own. Some loans look at landlord experience before they count the rent toward your income, so we check that first and tell you which loan fits.
Can I move out later and keep it as a rental?
Often, yes. Once you have lived there for the time your loan asks, typically a year, many owners move and keep the home as a rental. Your loan documents set out the terms for yours.
What changes when you move outNEXT STEP
Most buyers are never told a home can come with a rental.
Now you know.
Send us three rough numbers. You get a price range, the loan that fits, and homes on the market that match.
Free. No credit pull.