House hacking means buying a small multifamily building, living in one unit and renting out the rest. The tenants’ rent covers part of the mortgage, and because the building is your home, you can buy it with a far smaller down payment than an investor needs.
Whether that’s worth it starts with two numbers: what living there costs you each month, and what the building earns once you move out. Below, one duplex is run both ways.
How little can you put down on a duplex you live in?
A duplex you live in can be bought with far less down than a rental. The Federal Housing Administration (FHA), part of the Department of Housing and Urban Development (HUD), insures loans with a down payment as low as 3.5% of the price on buildings with one to four units. A standard loan, one without government backing, comes close: Freddie Mac’s limits for the loans it buys allow as little as 5% down on a two-to-four-unit home you live in. Buy the same building as a rental you won’t live in and the same limits call for at least 25% down. How much money you need to buy a rental lines up those down payments on a $400,000 duplex.
Small down payments bring mortgage insurance, which protects the lender, not you. A standard loan with less than 20% down usually carries private mortgage insurance, and its cost appears on the lender’s Loan Estimate. On an FHA loan, HUD sets the price in its Handbook 4000.1, the rulebook FHA lenders follow. As of September 2026, it’s 1.75% of the loan up front, then 0.55% a year at 3.5% down on a 30-year loan of $726,200 or less.
What does house hacking a duplex cost you each month?
Take a $300,000 duplex where each unit rents for $1,700 a month. You buy it with an FHA loan: 3.5% down at an assumed 7% for 30 years, with FHA’s $5,066 upfront premium paid in cash at closing. The yearly premium comes to about $133 a month at first. The building costs $3,600 a year in property taxes, $1,800 for insurance and $150 a month for water, sewer and trash. The rest follows the multifamily calculator’s own example: 6% of rent for empty months, 10% for repairs and big repairs, and 8% for management.
The first column sets your own unit’s rent at $0, since you live there. The second has your unit rented out too, the way the building runs once you move out.
| You live in one unit | Both units rented | |
|---|---|---|
| Rent | $1,700 | $3,400 |
| Empty months (6% of rent) | −$102 | −$204 |
| Property taxes and insurance | −$450 | −$450 |
| Water, sewer and trash | −$150 | −$150 |
| Repairs and big repairs (10% of rent) | −$170 | −$340 |
| Property management (8% of rent) | −$136 | −$272 |
| FHA mortgage insurance | −$133 | −$133 |
| Mortgage: principal and interest | −$1,926 | −$1,926 |
| Cash flow each month | −$1,367 | −$75 |
These are example figures, not a quote.
Living in the duplex costs you $1,367 a month. A unit like yours rents for $1,700, so that’s $333 a month less than renting one. Part of it also builds equity, your share of the building’s value: in the first year, about $245 a month of the mortgage payment pays down the loan.
One cost isn’t in that figure. The calculator sets repair money aside as a share of rent, so with your unit at $0, repairs inside your own home are yours to pay.
What does the duplex earn once you move out?
Once you move out and rent your unit for $1,700, the building loses $75 a month. The mortgage and the insurance premium don’t change. The rent doubles, and the costs figured as a share of it double with it. You would still pay in each month, but $75 instead of $1,367.
What does the smaller down payment cost?
On this duplex, the smaller down payment costs about $562 a month once both units are rented. Buy the same duplex as an investor, with 25% down and no mortgage insurance, and it makes $487 a month instead of losing $75.
| FHA, 3.5% down | Investor, 25% down | |
|---|---|---|
| Cash to buy (down payment, 3% closing costs, upfront FHA premium) | $24,566 | $84,000 |
| Mortgage each month (principal and interest) | $1,926 | $1,497 |
| FHA mortgage insurance each month | $133 | – |
| Cash flow each month | −$75 | +$487 |
The gap is $429 of extra mortgage on the bigger loan, plus the $133 premium. In return, the FHA buyer brings $59,434 less cash. Both loans here use 7%, though Fannie Mae charges extra on every loan for an investment property, one its owner doesn’t live in.
The yearly premium also lasts. At 3.5% down, the handbook’s chart charges it for as long as the loan runs. Put down 10% or more and the yearly rate drops to 0.50% and stops after 11 years. Adding the upfront premium to the loan instead raises the payment about $34 a month.
What rules come with an FHA house hack?
An FHA loan comes with two promises. The first is to live there. The handbook says: “At least one Borrower must occupy the Property within 60 Days of signing the security instrument and intend to continue occupancy for at least one year.” The security instrument is the mortgage (or deed of trust) you sign at closing.
The second is about short stays. On any building with two to four units, the lender has you sign form HUD-92561. In it you agree that, as long as the FHA loan is in place, no part of the building will be rented for less than 30 days, or with hotel services such as maid service or fresh linens. That rules out nightly guests in the other unit, and in yours after you move out.
FHA also insures only one home you live in per borrower at a time, with a few exceptions, such as a job move of over 100 miles. On a triplex or fourplex, the rents must pass FHA’s self-sufficiency test as well.
So, is house hacking worth it?
On this duplex, house hacking buys a home that costs $333 a month less than renting one like it, for $59,434 less cash than an investor puts in. The catch comes later: once you leave, the building runs $75 a month short where the investor’s clears $487. Your own numbers decide it, starting with the rent you pay now.
To run yours, open the multifamily calculator, set the building to two units and enter your own unit’s rent as $0. Type the monthly FHA premium, or the private mortgage insurance a lender quotes, into the HOA box, since the calculator has no mortgage insurance line. Read the monthly figure, then change your unit’s rent to what it would lease for and read it again. Before you count on the other unit’s rent, check it the way this duplex analysis does.