Glossary
House hack
A house hack is buying a property, living in one part of it, and renting out the rest so the rent covers most of your housing payment.
Common house hacks are a duplex, triplex or fourplex where you live in one unit, or a single family home where you rent out rooms or a basement apartment. Because you live there, you may be able to use owner-occupied financing with a smaller down payment.
How it works
Your net housing cost is the full payment minus the rent from the other units. Run The Deal models FHA, conventional and VA style loans for house hacks, then models the property as a full rental after you move out.
- Purchase price
- $300,000
- Down payment at 3.5%
- $10,500
- Full monthly payment with mortgage insurance (assumed)
- $2,400
- Rent from the other unit
- minus $1,500
Payment is an assumed figure for illustration. Down payment rules, mortgage insurance and occupancy rules vary by loan program and lender.
What to watch
- Occupancy rules. Owner-occupied loans usually require you to live there for a set time. Read the terms.
- Rent assumptions. Lenders may count only part of the other units' rent.
- The move-out case. Make sure the property still has positive cash flow once you rent your unit too.
- Repairs and [capex](/glossary/capex). You are the landlord and the neighbor. Budget for both.
Estimate the rent on every unit with the rental property calculator and sanity check it against FMR.
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