Buy a small building with an FHA loan, live in one unit, rent the rest. Move the sliders and watch your true monthly cost, the lender's self sufficiency test, and what happens the day you move out.
The deal
Sample triplex
Compare to the $2,450 rent you pay now. Red on the test means the lender may refuse the loan on a 3 or 4 unit building.
Sources and rules used
FHA minimum down payment 3.5% with a 580 or higher credit score. HUD, 203(b) program
FHA upfront mortgage insurance 1.75% of the loan, financed; annual premium 0.55% for most 30 year loans over $726,200 with 3.5% down, 0.50% for smaller loans (figure uses 0.55% for simplicity). HUD Mortgagee Letter 2023-05
Self sufficiency test for 3 and 4 unit properties: 75% of gross market rent (or the appraiser's vacancy factor) must cover the full monthly payment including taxes, insurance and MIP. HUD Handbook 4000.1, II.A.4.c
Sample costs: property tax 1.1% of price, insurance $2,400 a year, owner paid utilities $250 a month, vacancy 8%, repairs 5%, reserves 5%, manager 8% after move out, closing costs 3% less a $10,000 seller credit, $5,000 repairs at purchase. From the Koizen House Hacking Calculator sample deal.
What is simplified
Every rental unit gets the same market rent; the calculator lets each unit differ.
Property tax is a flat 1.1% of price; real rates vary by county and reset at purchase.
Annual MIP is one rate; HUD's table varies it by loan size, term and down payment.
Phase 2 (after move out) assumes your old unit rents at market and a manager takes 8%.
No rent growth, appreciation or income taxes; the calculator's 10 year tab adds those.
Educational figure for study. Not lending or financial advice. Every rate and rule should be confirmed with a lender on the day you apply.