Definition
House hacking
House hacking means living in part of a property and renting the rest — the other side of a duplex, spare bedrooms, or an accessory dwelling unit. It matters because owner-occupant financing is dramatically cheaper than investor financing: FHA allows 3.5% down on a two-to-four-unit property you live in, against 20% to 25% for the same building as a pure rental.
Effective housing cost = PITI + operating costs − rent collected
Worked example
A $420,000 triplex bought FHA with 3.5% down, renting two units at $1,450, cuts the owner's out-of-pocket housing cost to a few hundred dollars a month.
Rental metric examples use the default $265,000 duplex at $2,650 monthly rent, 25% down and 6.75% over 30 years. Strategy and tax examples use the assumptions stated above rather than that rental deal.
The mistake to avoid
Where this is calculated
The house hack calculator computes this from your own numbers and shows the arithmetic expanded. What your housing actually costs once tenants cover part of it, and what the building looks like after you move out.