House Hack Calculator

The math behind this calculator

Every number in the tool above comes from these formulas — nothing hidden.

Why house hacking is the cheapest entry into real estate

Investment property loans demand 15–25% down and charge higher rates. Owner-occupied loans demand a fraction of that. House hacking is the strategy that closes the gap: by living in the property, you unlock FHA financing at 3.5% down (with a 580+ credit score), conventional financing as low as 5% down with PMI, and — for eligible veterans — VA financing at 0% down. On a $300,000 duplex, the difference between 3.5% and 20% down is nearly $50,000 of cash.

FHA’s 203(b) program covers one- to four-unit properties, so a duplex, triplex, or fourplex all qualify as long as you occupy one unit as your primary residence. FHA loan limits for multi-unit properties are meaningfully higher than single-family limits — in 2026 they run roughly $693,000 for a duplex and just over $1 million for a fourplex, varying by county. Indiana’s limits sit near the floor, so nearly every central Indiana property qualifies.

The trade is simple: you accept living next to your tenants for at least a year, and in exchange you buy an income-producing asset with the cheapest financing that exists in real estate.

The five ways to house hack

• The classic: buy a 2–4 unit property, live in one unit, rent the others. Duplexes are the simplest version — fewer tenants, easier management, and they avoid the extra FHA income tests that apply to 3–4 unit properties.
• Rent by the room: buy a 3–4 bedroom single-family home and rent the spare bedrooms. Room rentals often generate 20–40% more total income than leasing to a single tenant, at the cost of privacy and more management.
• Build or convert an ADU: a basement apartment or garage conversion typically runs $30,000–$75,000 and creates a separate rentable unit within a single-family purchase.
• Short-term rental: Airbnb a spare bedroom or unit for premium nightly rates — more income, far more operations, and it depends on local STR rules.
• The live-in flip: live in the property 2 of the last 5 years and Section 121 lets you exclude up to $250,000 of capital gains ($500,000 married filing jointly) when you sell — a tax break unavailable to pure investors.

How the qualifying math works at your lender

Most lenders credit about 75% of documented rental income from the units you won’t occupy toward your qualifying income — the 25% haircut covers vacancy and expenses. If the other side of your duplex rents for $1,500, roughly $1,125 counts toward your monthly income for debt-to-income purposes. That credit can raise your price range dramatically.

Documentation matters: an existing lease is strongest; otherwise the lender uses the appraiser’s market-rent estimate on the appraisal. Room-rental income from a single-family house hack is harder to count — most lenders won’t credit income from bedrooms the way they do from separate units.

One more FHA wrinkle: on three- and four-unit properties, the property must pass a self-sufficiency test — the appraiser’s market rents for all units must generally cover the full housing payment before the loan works. Duplexes skip this test, which is part of why they’re the beginner’s classic.

Indianapolis numbers to plug in

• Average rent across Indianapolis is roughly $1,500 a month; 2-bedroom units average about $1,313 and 3-bedrooms about $1,715 (Zillow, 2026).
• Duplex sides in solid near-downtown neighborhoods — Holy Cross, Fountain Square, Garfield Park, Mapleton-Fall Creek — commonly rent in the $700–$1,100 range per unit.
• Pull actual parcel taxes from the county auditor (Marion County’s in-tact system, plus Hamilton, Johnson, and Boone county auditors for the donut counties) — never use the listing’s guess.
• Indianapolis utilities you’ll likely carry as owner: water, sewer, and trash. Budget them in the calculator, not out of habit from your apartment lease.
• Ask Austin for a lender introduction before you tour anything — payment scenarios with the real rate and PMI (or FHA mortgage insurance) change what you can buy by tens of thousands of dollars.

Reading the results

• A strong house hack covers at least half of your payment while you live there. Above 80% and you’re nearly living free; at 100%+ the tenants are paying you to live there.
• A break-even under 36 months is healthy; under 24 months means you found a genuinely good deal in this market.
• Check the move-out math hardest: if cash flow after you leave is negative at today’s rents, the deal only works as an appreciation bet — and you’ll be subsidizing that bet every month from your own paycheck.
• Rerun the calculator with rents 10% lower and utilities $100 higher. If it still works, it works.

The landlord reality of sharing a wall

House hacking makes you a landlord on day one, with the tenant ten feet away. You will field the late-night texts, choose the tenants, and decide how firmly to enforce your own lease — harder when eviction means a knock on the shared wall. Screen tenants as if you weren’t the owner, because you are also the neighbor.

The strategy compounds if you let it. After twelve months of occupancy you’ve satisfied the owner-occupancy requirement, the units are leased, and you can repeat the strategy on a new property with a new owner-occupied loan — converting one house hack at a time into a small portfolio. Many of Indianapolis’s most consistent investors started exactly this way.

Mistakes that break house hacks

• Ignoring lease-up: your rental units produce nothing for the first 30–60 days. Enter the calculator with a vacant unit’s cost in mind for month one.
• Underbudgeting utilities: tenants use more water and power than you do, and you’re likely eating water, sewer, and trash.
• Forgetting PMI: under 20% down on a conventional loan expect roughly 0.5–1% of the loan balance per year — it’s a real input in the calculator. FHA carries its own mortgage insurance premium instead.
• Paying extra because "the rent offsets it": overpaying on the buy is permanent; the rent offset only lasts until your tenants discover they’re overpaying too.
• Not budgeting 2% of the price for closing costs on top of the down payment — the break-even math quietly depends on it.
• Misjudging roommate tolerance: renting bedrooms is a lifestyle, not just a spreadsheet. Be honest about which version of the strategy you can sustain for a full year.