Definition
House hacking is living in one unit of a multi-unit property while renting the others. It uses residential mortgages while building a rental portfolio.
Where you’ll meet it
How do I finance a property I won't live in?
See it in Buying an investment property · Step 3About this term
House hacking allows owner-occupants to qualify for residential mortgages (better rates than investment mortgages) while building rental portfolio. Common house hacking involves 2-4 unit properties. Rents from other units ideally cover most/all of the owner's housing costs while building equity. This is excellent for first-time investors.
Pro Tip
House hacking is ideal for first-time investors. Build equity while learning management.
Example
A buyer purchases a duplex with an FHA loan, lives in one unit, rents the other for $1,200, which covers most of their $1,500 mortgage payment