Owner-occupied investing
House Hack Calculator
House hacking means living in one unit and renting the rest. The number that matters is what your own housing ends up costing: PITI plus operating costs, minus the rent you collect. On the example below that is $1,318 a month against $1,900 of rent — $582 saved every month, on $27,300 of cash to close.
While you live there
Your housing cost per month
$1,318
$3,497.86 of PITI plus $575 of operating costs, less $2,755 of rent collected.
Versus renting
+$582
Per month against $1,900 of rent.
Saved in year one
$6,986
Cash to close
$27,300
$14,700 down plus $12,600 of costs.
Year-one return on cash
41.4%
Rent saved plus principal paid, over cash in.
Cash flow once you move out
+$60
Every unit rented at the same rate.
Cash-on-cash, fully rented
2.6%
Monthly PITI
Principal and interest + mortgage insurance + tax + insurance + HOA
= $2,628.77 + $185.76 + $683.33 + $0
= $3,497.86
Rent collected
Units rented × rent × (1 − vacancy)
= 2 × $1,450 × (1 − 5%)
= $2,755 a month
Your housing cost
PITI + operating costs − rent collected
= $3,497.86 + $575 − $2,755
= $1,318 a month
| Monthly, while you live there | Amount |
|---|---|
| Principal and interest | $2,628.77 |
| Mortgage insurance | $185.76 |
| Property tax and insurance | $683.33 |
| PITI | $3,497.86 |
| Maintenance and CapEx reserves, utilities | $575 |
| Rent collected | ($2,755) |
| Your net housing cost | $1,318 |
| After you move out | Amount |
|---|---|
| All 3 units rented, after vacancy | $4,133 |
| PITI | ($3,497.86) |
| Operating costs | ($575) |
| Monthly cash flow | +$60 |
| Cash-on-cash | 2.6% |
| Year-one principal paydown | $4,319 |
Why the financing is the whole strategy
A house hack is not a better building than an investment property. It is the same building bought on dramatically better terms, because you are going to live in it.
| Terms | Down payment | Cash to close | Loan |
|---|---|---|---|
| FHA owner-occupant, 3.5% | $14,700 | $27,300 | $405,300 |
| Conventional owner-occupant, 5% | $21,000 | $33,600 | $399,000 |
| Investment property, 20% | $84,000 | $96,600 | $336,000 |
| Investment property, 25% | $105,000 | $117,600 | $315,000 |
The gap between $27,300 and $117,600 is roughly four years of saving for most people. That, and not the cash flow, is what house hacking actually buys — it converts a multi-year savings problem into a one-year occupancy commitment.
What the mortgage insurance costs, and when it stops
FHA loans carry an annual mortgage insurance premium — 0.55% of the balance on most 30-year loans with less than 5% down — plus a 1.75% up-front premium usually financed into the loan. On a $405,300 balance the annual premium is $2,229, or $186 a month.
On FHA loans originated with less than 10% down, that premium runs for the life of the loan; it does not fall off at 20% equity the way conventional private mortgage insurance does. Escaping it requires refinancing into a conventional loan, which is why many house hackers plan a refinance at the point they have 20% equity.
The honest return calculation
Common questions about house hacking
- How do you calculate a house hack?
- Take the full PITI plus operating costs for the whole building, then subtract the rent you collect from the units you do not live in. On the example here, $3,498 of PITI plus $575 of operating costs less $2,755 of collected rent is an effective housing cost of $1,318 a month — $582 less than the $1,900 the owner was paying in rent.
- Why is house hacking cheaper than buying a rental?
- Financing. An owner-occupant can buy a two-to-four unit property with an FHA loan at 3.5% down; the same building as a pure investment needs 20% to 25%. On a $420,000 triplex that is $14,700 versus $84,000 to $105,000 of down payment, and the owner-occupant rate is typically lower too.
- Do I have to live there, and for how long?
- Yes. FHA and conventional owner-occupant loans require you to occupy the property as your principal residence, generally within 60 days of closing and for at least twelve months. Lenders do verify, and occupancy misrepresentation on a federally-backed loan is mortgage fraud rather than a technicality.
- Does rental income help me qualify for the loan?
- Usually, partially. Lenders commonly credit 75% of documented market rent from the other units toward your qualifying income, using an appraiser's rent schedule. The 25% haircut covers vacancy and maintenance. Some programmes require landlord experience or reserves before they will count it at all.
- What happens to the numbers when I move out?
- Rent every unit and the building becomes an ordinary rental. On the example above that is $59 a month of cash flow — thin, because owner-occupant leverage of 96.5% leaves almost no equity cushion. House hacking is a strategy for cheap housing and a cheap entry, not usually for a strong stand-alone rental.
Once you move out, underwrite the building properly on the rental property calculator and check the loan on the DSCR calculator. If you are considering renting a spare room short-term instead, the short term rental calculator covers that maths.
The rest of the deal, on the same numbers
Your inputs are shared across every calculator on this site, so changing a figure here changes it everywhere.
- rental property calculatorThe full underwriting model: NOI, cap rate, cash-on-cash, DSCR, amortisation, a 30-year projection and a printable deal report.
- cap rate calculatorNet operating income divided by price, with every expense line shown and the debt service deliberately left out.
- dscr calculatorDebt service coverage ratio against real lender thresholds, plus the loan amount your NOI will actually support.
- cash on cash return calculatorAnnual pre-tax cash flow over every dollar of cash you put in — down payment, closing costs and rehab.
- rental property roi calculatorAll four return components — cash flow, principal paydown, appreciation and tax shelter — added up honestly.
- real estate investment calculatorYear-by-year projection to your exit, with equity multiple and IRR at every possible sale year.
- noi calculatorNet operating income built line by line from gross scheduled rent, and why the mortgage never appears in it.
- gross rent multiplierPrice divided by gross annual rent — the fastest screen there is, and the one that hides the most.
- rental yield calculatorGross yield and net yield side by side, with the gap between them explained in dollars.
- brrrr calculatorBuy, rehab, rent, refinance, repeat — cash left in the deal, capital recycled, and infinite returns handled properly.
- fix and flip calculatorHard-money points and carry, contingency, selling costs and the ARV at which the project breaks even.
- short term rental calculatorADR and occupancy through to NOI, with the long-term lease comparison that decides whether the extra work pays.
- seller financing calculatorOwner-carry notes: payment, balloon balance, interest to the balloon, and what the seller nets versus a cash sale.
- rental property depreciation calculator27.5-year straight line with the IRS mid-month convention, the annual tax shield, and recapture at sale.
- 1 percent rule real estateMonthly rent against purchase price, what the rule was calibrated for, and the interest rate at which it stops working.
- 50 percent rule real estateHalf of gross rent goes to operating expenses. Tested against your own itemised budget, line by line.
- 70 percent rule house flippingMaximum allowable offer for a flip: 70% of after-repair value, less the rehab budget.
- printable rental property deal reportThe whole analysis on one page, laid out for Letter and A4, ready to print or send to a lender.
- real estate investing terms glossaryEvery metric on this site defined once, with its formula and a worked example from the same deal.