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How to Buy Your First Duplex: ‘House Hacking’ for Beginners
When you live in your own investment property, the tenants’ rent can pay your mortgage — if you set a budget (and boundaries).
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Updated · 5 min read
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Abby Badach Doyle is a home and mortgages writer for NerdWallet. She is passionate about helping consumers understand the homebuying process and feel confident about their finances. Her work has appeared in The Associated Press, The Washington Post and others. Abby resides in Pittsburgh, a city known for its neighborly spirit and vibrant communities.
Alice Holbrook is a former editor of homebuying content at NerdWallet. She has covered personal finance topics for almost a decade and previously worked on NerdWallet's banking and insurance teams, as well as doing a stint on the copy desk. She is based in Ann Arbor, Michigan.
Emily Johnson recalls her first duplex fondly — well, sort of.
She rented to a friend’s sister, who ended up being “a nightmare”: The tenant smoked in the house, paid rent late and knocked on Johnson’s door at 11 p.m. with maintenance requests.
Nevertheless, Johnson caught the investing bug. That experience 20 years ago inspired her to buy four more owner-occupied, or live-in, duplexes, which generally require smaller down payments than investment properties occupied by tenants alone. Today, she works as a real estate agent with Sotheby’s in Los Angeles, helping others buy multifamily properties — and avoid common beginner blunders.
“I made all the mistakes the first time,” Johnson says with a laugh.
On TikTok, influencers have rebranded this concept as “house hacking.” Buying an owner-occupied multifamily property has a fresh appeal to younger buyers thirsty for passive income, or just a leg up in a brutal housing market.
The typical monthly principal and interest payment on a single-family home has more than doubled in the past three years, from $1,035 in 2020 to $2,192 in Q3 2023, according to the National Association of Realtors. Suddenly, unclogging someone else’s toilet doesn’t seem so bad, so long as they’re helping pay your mortgage.
But that rental income is “not free money,” Johnson stresses. To succeed as a live-in landlord, you need a goal, a budget and good boundaries, as well as a solid rental agreement to protect everyone involved.
Know your long-term goal
For many, buying an owner-occupied multifamily is the beginning of a path to financial freedom. “It's literally someone else paying your mortgage,” Johnson says.
First, establish your homebuying budget. Then, estimate how much the market rate rent will offset your mortgage payment — and establish your plan for the added income. Do you want to save for a down payment on a single-family home, then sell the duplex when you’re ready to move? Or maybe you’ll keep it to fund your child’s education — or your next multifamily property.
In Los Angeles, Johnson sees entertainment industry workers buying multifamily properties to have a source of steady cash between gigs.
“It's a great model for artists, for people who want extra passive income,” she says.
Find a buyer’s agent who understands your goals and can help find a suitable property. For example, you might be willing to sacrifice on square footage if you plan to move out in a few years. For a long-term residence, you might want more space and privacy.
Shop for a mortgage
You’ll save money if you shop around: Compare lenders (at least three) for your mortgage preapproval.
You don’t need to put 20% down to buy a multifamily property. Last month, Fannie Mae lowered its down payment requirements to 5% for multifamily properties up to four units, which previously required 15% to 25% down.
You can put down as little as 3.5% on a property up to four units with an FHA loan. Matt Horan bought his first home, a duplex, in Pittsburgh in August 2019 using an FHA 203(k) renovation loan. That enabled him to roll remodeling costs into his monthly mortgage payment.
“I thought, OK, I would be able to buy a home now sooner than I anticipated for a less upfront cost,” he says, “while I have someone that pays for most of my mortgage, if not all.”
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
3%NBKC offers conventional loans for as little as 3% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
500500
Min. down payment
3.5%New American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
4.0
NerdWallet rating
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
0%On VA loans, NBKC offers down payments as low as 0%.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
500500
Min. down payment
3.5%New American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
3%Rate offers conventional loans with as little as 3% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
3%NBKC offers conventional loans for as little as 3% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
3%Rocket Mortgage offers conventional mortgages with as little as 1% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
3%New American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
N/ANew American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
N/ANew American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
3%NBKC offers conventional loans for as little as 3% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
500500
Min. down payment
3.5%New American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
4.0
NerdWallet rating
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
3.5%First-time home buyers may qualify for 3% down mortgages at Rocket.