How house hacking works
House hacking means buying a small multifamily property, living in one unit and renting the others. The rent from your neighbors pays part or all of your mortgage, so you build equity while your own housing cost falls.
Your net housing cost = mortgage + mortgage insurance + tax + insurance + upkeep − rent from the other units
Why the financing is different
Because you live in the property, it can qualify for owner-occupied financing, which usually means a lower down payment and rate than an investment loan. FHA loans, for example, can finance two- to four-unit homes with as little as 3.5% down for qualified buyers, and conventional programs offer low-down-payment options too. Owner-occupied loans generally require you to live in the property, typically for at least a year.
Two numbers to watch
Savings vs. renting compares your net cost with the rent you pay today. Cash flow if you move out shows whether the property still works as a pure rental once your unit is rented too, which matters for your next purchase.
Costs people forget
Budget for vacancy between tenants, repairs on every unit, capital replacements and your own time as an on-site landlord. Read our guides on screening tenants and landlord insurance before you buy.