Short answer: House hacking works when the rent from the other units covers most of your payment. Add principal and interest, taxes, insurance, HOA and FHA mortgage insurance, subtract the other units' rent, and add a reserve for their vacancy and repairs. That is your net housing cost. Compare it with your rent today, then check cash flow after you move out.
It uses the same formulas as FirstDoor's full deal score.
How the house hacking math works
House hacking means buying a 2–4 unit property, living in one unit and renting out the others. Because you live there, you can use a homeowner loan such as FHA with as little as 3.5% down. While you live there, the number that matters is your net housing cost, not cash flow.
Net housing cost = principal & interest + taxes + insurance + HOA + mortgage insurance − rent from the other units + reserve on those unitsThe reserve covers vacancy and repairs on the rented units. Compare the result with what you pay in rent today, and remember that part of each payment pays down your loan. Then check the second scenario: after you move out, every unit is rented and the property has to carry itself, with vacancy, maintenance and management on the full rent.
The FHA rules built in
| Down payment | 3.5% minimum (96.5% loan-to-value) for a 580+ credit score on a 1–4 unit home you live in (HUD Handbook 4000.1). |
| Upfront premium | 1.75% of the base loan, usually added to the loan (HUD Mortgagee Letter 2023-05). |
| Annual premium | 0.55% a year for a 30-year loan above 95% LTV up to $726,200, charged monthly. Put 5% or more down and it is 0.50%. |
| Self-sufficiency test | On 3–4 units, the payment can't exceed the appraiser's rent for all units minus the greater of the appraiser's vacancy and maintenance estimate or 25%. The calculator uses the 25% floor and tests the full payment, including mortgage insurance and HOA. |
For a conventional loan (Fannie Mae allows 5% down on a 2–4 unit principal residence), set both mortgage insurance boxes to 0 and add your lender's private mortgage insurance quote to HOA.
Worked example: an FHA duplex at US medians
The defaults are the duplex from our house hacking guide: a price at the US median home value of $360,600, with the other unit renting for the US median 2-bedroom gross rent of $1,490/mo (Census ACS 2024). FHA 3.5% down on a 30-year loan at 7.32% (Freddie Mac PMMS, week of 2026-10-22; FHA rates vary), the US median property tax of $3,211/yr and $1,800/yr insurance (assumed).
| Loan incl. 1.75% upfront premium | $354,069 |
| Principal & interest | $2,432 |
| FHA annual premium (0.55%) | $159 |
| Full monthly payment | $3,009 |
| Rent from the other unit | −$1,490 |
| Reserve on the rented unit (15%, assumed) | $224 |
| Your net housing cost / mo | $1,743 |
| Goes to principal (month 1) | $272 |
| Cash to close (3.5% down + 3% closing) | $23,439 |
| Cash flow after you move out | −$566/mo |
Living there costs about $1,743 a month, $253 more than the $1,490 median 2-bedroom rent. Once you move out, the property loses about $566 a month. At median prices, house hacking is a way to learn landlording and build equity, not a cash machine. It works best when you buy below the median or where rents are high relative to prices. For comparison, a fourplex at the same price and per-unit rent would leave you $790 a month ahead while you live there, but fourplexes rarely sell at single-home prices. Score the move-out scenario in the full deal calculator (it leaves out FHA mortgage insurance).
Frequently asked questions
How do you calculate house hacking?
Add up the full monthly payment: principal and interest, property tax, insurance, HOA and mortgage insurance. Subtract the rent from the units you rent out and add a reserve (15% of that rent by default) for vacancy and repairs. The result is your net housing cost while you live there.
How much do you need to put down to house hack with FHA?
HUD allows a 96.5% loan-to-value on a purchase for borrowers with a 580 or higher credit score, which is 3.5% down on a 1–4 unit home you live in. Closing costs and reserves come on top. Fannie Mae allows 5% down on a 2–4 unit principal residence.
What is the FHA self-sufficiency test?
For 3- and 4-unit FHA purchases, the monthly payment can't exceed the appraiser's fair market rent for all units minus the greater of the appraiser's vacancy and maintenance estimate or 25%. Duplexes don't need to pass it. This calculator uses your rent for every unit and the 25% floor, so the appraiser's numbers may differ.
Does the unit I live in count as rent?
No. While you live there, your unit earns nothing, so only the other units' rent offsets the payment. After you move out, the calculator counts rent from every unit.
What does this calculator leave out?
Utilities you pay as the owner, repairs beyond the reserve, rent and expense growth, tax effects, and the fact that FHA annual premiums are charged on the declining balance. FHA rates and county loan limits vary, so get a Loan Estimate before you rely on the numbers.