The financing advantage
Investment property financing requires 20% to 25% down and prices worse than owner-occupied. Buy a duplex, triplex, or fourplex and live in one unit, and you access owner-occupied terms — as little as 3.5% down on FHA — on a property that produces rental income.
The income advantage
Projected rental income from the other units can help you qualify, subject to program rules on how much may be counted. Many house hackers live substantially below what an equivalent apartment would cost, which accelerates savings for the next acquisition.
The tradeoffs
You live next to your tenants, which changes both the management dynamic and the screening standard you should apply. Occupancy requirements typically run twelve months. And two- to four-unit inventory is thin in many markets, so the search takes longer. Read rental underwriting before you start.
Frequently asked questions
Can I use an FHA loan for a fourplex?
Yes, provided you occupy one unit for at least a year and the property meets FHA standards.
What happens after the occupancy period?
You may move out and keep the property as a full rental, then repeat the strategy with a new owner-occupied purchase.