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 so your tenants pay most (or all) of your mortgage. It's one of the highest-leverage moves in residential real estate for one structural reason: owner-occupant financing. Because you live there, you can buy a 2–4 unit building with 3.5% down (FHA) or 5% down (conventional owner-occupant) instead of the 20–25% down an investor loan requires for the very same building.
The result: a first property, a landlording apprenticeship, and a dramatically lower housing bill — all funded with a fraction of the cash a traditional rental takes. 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 great deals, because most house hacks don't “cash flow” in year 1 — and don't need to.
The comparison that matters is your effective housing cost vs. renting the equivalent. If a comparable one-bed rents for $2,200/month and your duplex nets you out at $800/month for the same quality of housing, the house hack is saving you $1,400/month — 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
Residential owner-occupant financing covers 1–4 unit properties. That means the same low-down loans that buy a starter home can buy a fourplex — as long as you live in one of the units for at least a year after closing. The two common routes:
- FHA, 3.5% down. The most-celebrated house hack vehicle. The catches: mortgage insurance for the life of the loan on most FHA loans (cancellable only by refinancing), stricter property-condition standards at appraisal, and — on 3–4 unit properties — the self-sufficiency test: projected rents must cover the entire payment. Many 3–4 unit FHA deals fail that test in higher-cost markets.
- Conventional owner-occupant, 5% down. No self-sufficiency test, and PMI is cancellable at 80% LTV. Sometimes the extra 1.5% of down payment salvages a deal FHA can't close.
The calculator's default is 5% down at a conventional owner-occupant profile — edit the down payment to 3.5% to model the FHA route. Either way, 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. The cash-flow test belongs to year 2, 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 the one-year occupancy requirement, most house hackers rent their unit at market and either stay put or repeat with the next property. Whether the building works as a pure rental at that point — cash flow, cap rate, DSCR — is what separates a stepping-stone from a trap. Check the rented-building 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 full underwrite needs per-unit rents modeled independently, the year-2 move-out scenario, actual property tax and insurance for the address, and the tax treatment of the rented portion. TrueCap's analyzer handles all of that with a House Hack mode that applies owner-occupant defaults automatically; 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 so tenant rent covers most or all of your housing cost. The structural advantage is financing: owner-occupants qualify for 3.5% down FHA or 5% down conventional loans instead of the 20-25% down investor loans a pure rental requires.
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?+
Usually not, and that's fine. The right benchmark is housing savings, not cash flow: compare your effective housing cost to what you'd pay to rent a comparable place. If renting would cost you $2,200/month and the house hack nets you out at $800/month, you're saving $1,400/month even though the property doesn't 'cash flow' the way a pure rental would. Cash flow matters at year 2, when you move out and rent your unit at market.
What down payment do I need to house hack?+
As an owner-occupant, typically 3.5% down with an FHA loan or 5% down with a conventional owner-occupant loan — on 2-4 unit properties, not just single-family. Both require you to live in the property for one year after closing as your primary residence. Compare that with 20-25% down for the same building bought as a pure investment.
What is the FHA self-sufficiency test?+
For 3-4 unit properties, FHA requires the property's projected rents to cover the entire PITIA payment. Many 3-4 unit FHA deals fail this test in higher-cost markets. Conventional 5% owner-occupant financing has no self-sufficiency test — sometimes 5% down conventional salvages a deal that fails at FHA's 3.5%.
Does my own unit count as income?+
No. While you live there, your unit produces no rent, so the honest calculation excludes it. When you model the year-2 move-out — renting your unit at market and turning the property into a pure rental — the picture changes, which is exactly what TrueCap's full analyzer models with per-unit rents and an owner-occupant toggle.
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.