House hacking calculator

House hacking calculator

House hacking means buying a 2–4 unit property, living in one unit, and renting the others. Tenants pay rent that offsets — or fully covers — your mortgage and operating costs. It's the most accessible path to real estate investing because owner-occupant financing rules allow low down payments (3.5% FHA) that wouldn't be available on a pure investment property.

The economics of a house hack

Total housing cost = mortgage + taxes + insurance + maintenance

Effective monthly cost = total cost − rental income

When rental income equals or exceeds total housing cost, your cost of living approaches zero — every mortgage payment is pure equity building paid by tenants.

Owner-occupant financing advantage

Conventional investment property loans require 20–25% down and carry a rate premium. Owner-occupant financing on the same 2–4 unit property requires only 3.5–10% down at residential rates. The difference in down payment alone on a $500,000 duplex: $17,500 (FHA) vs. $100,000–$125,000 (investor loan). That capital stays invested elsewhere.

Break-even occupancy

What occupancy rate do the rental units need to cover your housing costs? Break-even occupancy = your housing costs / maximum rental potential. If your duplex costs $3,000 all-in and you could rent both units for $1,500 each, break-even occupancy is 100% — you need both units rented. If you could rent each for $2,000, break-even is 75% — one unit covering the bills with buffer.

Cash-on-cash return

If rental income exceeds your housing costs, you have positive monthly cash flow. Cash-on-cash = annual cash flow / total cash invested (down payment + closing costs + repairs). A house hack generating $500/month cash flow on a $35,000 investment yields 17% CoC before appreciation or principal paydown.