What is house hacking?
House hacking is buying a small multifamily property — a duplex, triplex, or fourplex — living in one unit, and renting out the rest to offset part of your housing cost. Eligible borrowers may have lower-down-payment owner-occupant financing options, but lawful unit count, occupancy, borrower, reserves, mortgage insurance, property standards, and program terms determine eligibility and cash to close.
Potential results include ownership experience and a modeled housing-cost offset; neither a lower bill nor lower cash to close is guaranteed. For the full strategy walkthrough, start with house hacking explained or the persona page for house hackers using TrueCap.
The math this calculator runs
Your own unit counts as zero income while you live in it — the same owner-occupant convention TrueCap's full analyzer applies when it excludes the occupied unit from rental income. That single convention is what separates honest house-hack math from listing-flyer math: a fourplex's advertised gross rent includes the unit you're about to take off the market.
The right benchmark: housing cost, not cash flow
A pure rental is judged on cash flow, cap rate, and cash-on-cash return. A house hack is different: while you occupy a unit, the property is producing housing first and income second. Judging it as a rental will talk you out of some candidates if you ignore the housing provided, but neither benchmark alone makes a deal good.
The comparison that matters is your effective housing cost vs. renting the equivalent. If a comparable one-bed rents for $2,200/month and a verified duplex scenario nets to $800/month for comparable housing, the modeled difference is $1,400/month before transaction costs, reserves, capital work, and risk — even though a spreadsheet that treats it as a rental would show negative cash flow. The house-hack underwriting guide walks through this benchmark in detail, including the owner-occupant tax wrinkles worth a CPA conversation.
Financing: why 2–4 units is the sweet spot
Some residential owner-occupant programs cover eligible 1–4 unit properties. Occupancy intent and duration, borrower and property eligibility, unit count, reserves, and all other terms must be confirmed in the program and loan documents. Two routes to ask lenders about are:
- FHA. Eligible borrowers may be offered a 3.5% minimum down payment. Current mortgage insurance, property-condition, occupancy, reserve, and 3–4 unit Net Self-Sufficiency Rental Income Eligibility requirements apply; the lender, not this calculator, determines the result.
- Conventional owner-occupant. Some programs offer low-down-payment options. Eligibility, mortgage insurance, occupancy, reserves, appraisal, unit count, and lender overlays are product-specific; a conventional scenario is not a fallback approval.
The calculator's percentages are editable scenario inputs, not program recommendations or quotes. Run the mortgage line items through the mortgage payment calculator if you want the P&I, tax, and insurance breakdown on its own.
Reading the result: the two numbers
The headline: PITI minus rent
This is the “live for $X/month” number — what a perfect month looks like, with every unit occupied and nothing breaking. It's the right number for the rent-vs-hack comparison, and it's the number house-hack listings love to advertise.
The honest one: after reserves
Tenants move out. Water heaters fail. The after-reserves line sets aside vacancy, maintenance, and CapEx on the rented units — the same reserve categories TrueCap's house-hack starter template applies — so the number you underwrite with survives a normal year, not just a perfect one. No management fee is included because most house hackers self-manage; if you'd rather not field the 11pm drip-faucet text from the unit next door, add one.
Common house-hacking mistakes
1. Counting your own unit's “rent” as income
The gross rent on the listing includes the unit you're taking off the market. Underwrite only the units that will actually have tenants.
2. Judging the deal like a pure rental
Year-1 house hacks rarely cash flow, and that's not failure — the benchmark is your housing cost vs. renting. Model the later full-rental cash flow as a separate scenario; the live-in analysis does not switch automatically when you move out.
3. Skipping reserves because “I'll be right there”
Proximity doesn't prevent vacancies or roof leaks. It just means you hear about them sooner.
4. Ignoring the year-2 transition
The exit plan matters as much as the entry. After satisfying the occupancy terms in their specific loan documents, some house hackers rent their unit and move elsewhere. Whether the building works as a pure rental at that point — cash flow, cap rate, DSCR — depends on the rent and costs at that time. Save that full-rental case separately, verify it, and check the math with the cap rate calculator and the DSCR calculator.
When you need more than a quick screen
This calculator answers the first question — “what would I actually pay to live here?” — in seconds. The deeper review needs per-unit rents, verified property tax and insurance, and the tax treatment of the rented portion. Start with House Hack mode for the live-in case, then save a separate full-rental scenario with your unit rented to compare the later move-out state explicitly. If you're weighing tools, see how it compares to BiggerPockets for house hacking or read the best rental analysis tools for house hackers.
Frequently asked questions
What is house hacking?+
Buying a 2-4 unit property (or a single-family with rentable rooms or an ADU), living in one unit, and renting the others to offset part of your housing cost. Eligible owner-occupants may have lower-down-payment options than an investor purchase, but borrower, property, occupancy, reserve, insurance, and program requirements still determine eligibility and terms.
How does this calculator work?+
It computes your full monthly payment (principal, interest, property tax, and insurance), subtracts the rent from the units you don't live in, and shows what's left — your effective monthly housing cost. Your own unit counts as zero income, the same owner-occupant convention TrueCap's full analyzer uses. It also shows an after-reserves number that sets aside vacancy, maintenance, and CapEx on the rented units.
Should a house hack cash flow?+
There is no universal target. Compare the owner-occupant scenario's verified payment, rent, utilities, reserves, maintenance, capital work, and transaction costs with a genuinely comparable rental. Also model any later move-out separately, subject to the loan documents, insurance, local law, lawful unit status, and then-current achievable rent; year 2 is not guaranteed cash flow.
What down payment do I need to house hack?+
FHA can permit a 3.5% minimum down payment for an eligible borrower and property; some conventional owner-occupant programs also offer low-down-payment options. Those figures are not universal quotes or approvals. FHA and conventional occupancy certifications, eligible unit counts, reserves, mortgage insurance, and lender overlays differ, so obtain the proposed program's written terms before underwriting.
What is the FHA self-sufficiency test?+
HUD applies a Net Self-Sufficiency Rental Income Eligibility calculation to FHA-financed 3-4 unit properties. The lender performs that calculation using Handbook 4000.1 inputs; TrueCap's projected rents do not establish eligibility. Conventional alternatives use separate program and lender underwriting, so the absence of this FHA calculation does not imply approval.
Does my own unit count as income?+
No. While you live there, your unit produces no rent, so the live-in calculation excludes it. To evaluate a later move-out, save a separate full-rental scenario with your unit's then-current verified rent and compare it with the live-in analysis. TrueCap does not switch occupancy automatically.
Why does the calculator add reserves back?+
Because vacancies and repairs happen even when you live next door. The headline number (PITI minus rent) is the optimistic month. The after-reserves number sets aside vacancy, maintenance, and CapEx on the rented units — the same reserve categories TrueCap's house-hack starter template uses — and it's the number to underwrite with.