House hacking is a popular first step into real estate. You buy a property with two to four units, live in one, and rent out the others so your tenants help pay your mortgage.
The financing advantage
Because you live there, it counts as a primary residence, not an investment property. That means you can use low-down-payment, owner-occupied loans instead of the bigger down payments investors usually face.
- FHA: as little as 3.5% down on a 2 to 4 unit home you live in
- Conventional: low-down-payment options for owner-occupants
- VA: zero down on multi-unit homes for eligible buyers
Rent can help you qualify
On many programs, a portion of the expected rent from the other units can count as income, which can boost how much home you qualify for.
Things to weigh
You become a landlord and a neighbor at the same time, so factor in management, vacancies, and repairs. Done well, it can dramatically lower your own cost of living.
A 2 to 4 unit home you live in opens doors that pure investment properties do not. Ask us how the rental income could change your numbers.