Passive Income Resource Guide
House Hacking
165 articles9 sections
Getting started
- What Is House Hacking? The Complete GuideStart here House hacking means buying a home you live in and renting part of it. Owner-occupied loans allow 0-5% down if you move in within 60 days and stay a year.
- House Hacking vs Traditional Renting: Financial Comparison A house hack can cost less per month than rent, but buying and selling costs can leave renting ahead if you sell within 5 years and prices stay flat.
Ways to house hack
- Basement Apartment Conversion for House Hacking A basement becomes a legal rental unit only if it meets ceiling, escape-window, fire-separation, and alarm rules and your zoning allows an ADU or second unit.
- House Hacking a Duplex: Step-by-Step Guide Buy a 2-4 unit building with an owner-occupied loan, move into one unit within 60 days, and rent the rest. Check legal units, meters, leases, and FHA's rent test.
- Building an ADU for House Hacking Income You can add a rentable ADU where zoning allows; California, Washington, and Arizona require cities to allow them. Budget permits, a six-figure build, and a payback plan.
- House Hacking with Airbnb: Short-Term Rental Strategy Short-term renting part of your home can beat a lease, but it adds city permits, different tax rules, insurance gaps, and income most lenders will not count.
- House Hacking by Renting Spare Rooms Rent bedrooms in the home you live in by confirming each is a legal bedroom, checking local occupant limits, using a written agreement, and splitting costs for taxes.
Financing and rental income
- Financing Your First House Hack: FHA, VA, and Conventional Loans For a 2-4 unit home you live in, FHA needs 3.5% down, conventional loans 5%, and VA 0% for eligible borrowers. Compare insurance, limits, and occupancy rules.
- Calculating Rental Income for House Hacking Properties FHA, Fannie Mae, and VA lenders count 75% of the rent from units you won't live in. A 3-4 unit FHA buy must also pass a self-sufficiency test.
- House Hacking with a VA Loan: Zero Down Payment Strategy A VA loan can buy a 2-4 unit home with 0% down if you live in one unit. Rent counts only if you show landlord ability and hold 6 months of payment reserves.
Tenants and moving out
- House Hacking Exit Strategies: What Comes Next After the 1-year occupancy period, keep it as a rental, refinance, sell within 3 years of moving out to keep the home sale exclusion, or buy your next home.
- Screening Housemates and Tenants for House Hacking Use written criteria for every applicant. Federal law exempts owner-occupied buildings of up to 4 units, but not ads, race, or state laws like California's.
Rules, taxes, and insurance
- Insurance for House Hackers: What You Need Tell your insurer about any tenant. Rooms and 2-4 units you live in can fit a homeowners policy; a detached ADU or a home you leave needs landlord coverage.
- House Hacking Tax Benefits You Should Know Split shared costs by rented space, deduct and depreciate the rented share on Schedule E, and use up to $25,000 of rental loss if your MAGI is $100,000 or less.
- Zoning and Permits for House Hacking Before you buy, get the legal unit count in writing, check permits and the certificate of occupancy, and confirm rental license, occupancy, and HOA rules.
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