If you have searched “house hacking triplex,” you have probably found a lender page with a made-up building. I would rather show you the part I can stand behind, and keep every other figure labeled as an example.
I have been investing since 2012. My first house hack was a triplex in Minneapolis. I closed in May 2017 with an FHA loan. Once I was living there, my own housing cost was about $170 a month.
That is the only personal dollar figure I am putting on the triplex itself. I am not filling in a rent roll, a purchase price, or a down-payment percentage for that closing. Where a worksheet helps, it is labeled Example, and those figures are not my deal.
What house hacking a triplex actually means
House hacking means you buy a small multifamily property, live in one unit, and rent the others. Rent from the units you do not live in goes toward the mortgage, taxes, insurance, and the rest of the bill. What is left is your housing cost. Sometimes that is much lower than the apartment you left. Sometimes the property pays you. Sometimes, especially when rates are high, you still write a check every month. It is just a smaller one than rent.
A triplex is three units. You live in one. The other two can bring in rent if the people already there have leases you will take on, or if the units are vacant and legal to rent. You share a roof, a yard, or a stairwell with your tenants. One loan, one closing, two other households helping carry the payment.
FHA will insure a loan on a two-, three-, or four-unit property when you occupy one unit. A triplex has more rent than a duplex and one less unit to manage than a fourplex. It also has a test a plain duplex does not. And the phrase “FHA triplex house hack” is three decisions, not one product: the loan, the building, and the choice to live there. You can line them up and still have a bad deal if the payment is heavy and the rents are thin.
My first house hack: a Minneapolis triplex, May 2017
I closed on that Minneapolis triplex in May 2017. The loan was FHA. My housing cost after I moved in was about $170 a month.
I still own 1511 2nd St NE in Minneapolis. That is the property I call my Minneapolis rotation deal: live in a unit, then later move and keep the building. I teach that sequence in the House Hacking Mastery course. This post stays on that first part: the FHA triplex, and a housing cost of about $170 a month. The longer write-up is the free Triplex Blueprint.
The FHA rules that decide a triplex house hack
I am not your lender. These are the rules to recognize before you fall in love with a listing. A lender can be stricter than the handbook. Confirm each one on a live pre-approval. The rulebook is HUD’s Single Family Housing Policy Handbook 4000.1. When a blog and a lender disagree, the handbook and the underwriter win.
Down payment. For many FHA borrowers the minimum down payment is 3.5 percent. A lower credit score can push that minimum higher. That percentage is not a description of my closing, and it is not your full cash to close.
Owner-occupancy. You have to live there, and the expectation to plan around is at least 12 months as your principal residence. Move in and actually live there. If the plan is to sign the papers and rent all three units out next month, that is not a house hack. That is a false statement on a federal mortgage.
Loan limits. FHA will not insure a loan above the limit for that county and that unit count. A triplex uses the three-unit limit, which is higher than the one-unit limit and lower than the four-unit limit. The figures change, and they differ by county, so I am not typing this year’s ceiling into a post. Look the county up on HUD’s FHA mortgage limits search before you write an offer.
Self-sufficiency. On a three- or four-unit property, FHA adds a test a typical duplex does not have to pass. This is the part that kills pretty listings, and the part that keeps you from buying a triplex the rents cannot carry.
The self-sufficiency test, with an example
Handbook 4000.1’s self-sufficiency rule, in plain language, works like this.
The appraiser estimates market rent for every unit, including the unit you will live in. From that total, the test subtracts the greater of the appraiser’s vacancy-and-maintenance figure or 25 percent of the rent. What is left is the net rent the test counts. In the usual case, that means 75 percent of market rent on all units.
That net rent has to cover the monthly PITI: principal, interest, taxes, and insurance. The handbook’s line is that PITI divided by that net rent may not be more than 100 percent. Said the other way: 75 percent of the rent on the whole building, your unit included, has to be at least the PITI. Ask the lender whether that PITI figure also includes the monthly mortgage insurance premium and any association dues.
A two-unit property is generally exempt from this test. An accessory dwelling unit can tip a duplex into the three-unit rules, so say that out loud before you pay for an inspection. And this test is not “can I use rental income to qualify.” Qualifying compares your debts with your income. Self-sufficiency asks whether the building’s rent covers the payment, counting your unit even though you are not paying yourself rent. You can pass one gate and fail the other.
Example
These rents and this payment are made up so you can see the steps. They are not the Minneapolis triplex.
| Step | Example figure |
|---|---|
| Market rent, unit A | $1,400 |
| Market rent, unit B | $1,300 |
| Market rent, unit C | $1,250 |
| Total market rent | $3,950 |
| 75% counted in the test | $2,962.50 |
| Example PITI that passes | $2,800 |
| Example PITI that fails | $3,100 |
Read the table left to right. At $2,800 of PITI the example passes, because $2,962.50 is more than the payment (about 95 percent of the cap). At $3,100 it fails. A larger down payment or a lower price can shrink PITI until it passes. Hoping the appraiser counts rent you have not earned yet will not.
I closed an FHA loan on a triplex in 2017, so that property met the version of this test the lender applied then. I am not going to back into a rent or a PITI and call it the appraisal. Run the steps on the listing in front of you, then make the lender run them again.
Triplex house hack numbers: what you actually pay to live there
The self-sufficiency test asks, “Will FHA insure this?” Your question is different: “What do I pay to live here?”
I use net housing cost for that. Start with the full monthly payment you will actually send, including mortgage insurance if the loan has it. Subtract the rent you collect from the units you do not live in, after a vacancy and repair allowance you can defend. What is left is what the building costs you to live there. If the rent you keep is larger than the payment, the sign flips and the property pays you. Do not delete the allowance just so the sign flips on a spreadsheet.
Example
Again, not my deal. Monthly PITI of $2,650. Rent from the two units you are not living in: $1,200 and $1,150, so $2,350. Set aside 8 percent of that rent for vacancy and repairs, which is $188. Rent you can count on in a normal month: about $2,162. Housing cost: $2,650 minus $2,162, which is $488 a month.
On the Minneapolis triplex, my housing cost was about $170 a month. That is my result from 2017, not the example above with the inputs swapped, and not a quote for this year. Rates, taxes, and insurance have moved. Compare any deal with your own rent and your own reserves.
Cash to close is not the down payment
“3.5 percent down” is the line that gets repeated. It is a down-payment minimum for many FHA borrowers. Cash to close is the money that actually has to be in the deal: the down payment, plus closing costs, prepaid taxes, prepaid insurance, and the interest that has to be paid at the table. Repairs the lender requires before they will fund can sit in that number too.
Across my three deals, cash to close added up to $57,100. That is total cash to close. It is not a total of down payments, and it is not the cash to close on the triplex by itself. I am not splitting that $57,100 into three closings here, and I am not calling any of this “nothing down.” Three deals, added together, took $57,100 in cash to close.
Housing cost on the triplex got very low. The front door still took real cash. On a pre-approval, ask for cash to close on a specific property, not a verbal “about 3.5 percent,” and ask what would move it: rate, tax escrow, or a repair holdback.
What living in the building is actually like
You will see your tenants, and they will see you. Screen the way you would if you lived an hour away. Use a written lease. Collect rent the same way every month. Fix what you are responsible for on a normal timeline. Living in one of the units does not make the lease optional.
Budget a vacancy even if the other units are full on day one, and budget repairs even if the inspection was kind. A triplex has three kitchens. Your housing cost only stays low if those other units stay occupied and the building stays livable. The property I have kept in the live-there-then-keep pattern is 1511 2nd St NE, my Minneapolis rotation deal. That sequence is in the House Hacking Mastery course.
How to house hack a triplex, in the order I would use again
If a friend asked me how to house hack a triplex with an FHA loan now, this is the order I would give them.
- Get a pre-approval from a lender who has closed FHA loans on three- and four-unit properties. Ask, in writing, how they run self-sufficiency and which rents they count when they qualify you.
- Look up the three-unit limit for the county on HUD’s limits search before you tour. Over the limit is not an FHA deal unless the price comes down or you use a different loan.
- Underwrite net housing cost before you get attached. Treat the seller’s rent as a rumor until you see leases or the appraiser’s rent schedule, and put vacancy and repairs in the math on purpose.
- Run the self-sufficiency steps with the rents and the payment you actually have. If 75 percent of all-unit rent does not cover PITI, do not hope the appraisal saves you.
- Know cash to close, and keep a reserve after it. The $57,100 across my three deals is there so “you still need cash” is concrete. Your number will be different. It will not be zero because the down-payment percentage looks small.
- Plan on the full 12 months. Decide which unit you will actually occupy. The smaller one is the usual move, because it leaves the larger rents in place. Confirm it is legal, and that you can stand to live in it.
- After you close, be a boring landlord. Written lease, rent collected the same way every month, repairs handled like a business.
Questions people ask about an FHA triplex house hack
Can you buy a triplex with an FHA loan?
Yes, if you will live in one unit. FHA insures owner-occupied loans on up to four units. You still have to qualify, stay under the county three-unit limit, and pass self-sufficiency on a three- or four-unit property.
How much cash does a triplex house hack take?
Budget cash to close, not just a 3.5 percent down payment. Closing costs and prepaids sit on top. Across my three deals, cash to close was $57,100 total. That is not one deal, and it is not a down-payment total.
How long do you have to live in an FHA home before renting it out?
Plan on at least 12 months as your primary residence. After that year, a lot of people move and keep the building. That is the idea behind my Minneapolis rotation deal at 1511 2nd St NE. It only works if you actually lived there.
Can you use rental income to qualify for an FHA triplex?
Often, on the units you will not live in. That is a different worksheet from self-sufficiency, which counts rent on every unit, including yours, against PITI. Ask the lender to show you both numbers.
Is a $170 housing cost normal?
It was mine, on a Minneapolis triplex I closed in May 2017 with an FHA loan. It is not a forecast. Use the labeled examples here and your lender’s payment.
Joe Williams
The House Hacking Coach
Investing since 2012. First house hack: a Minneapolis triplex that closed in May 2017 with an FHA loan. His housing cost on that deal was about $170 a month. He owns 1511 2nd St NE in Minneapolis, his Minneapolis rotation deal.
This is not financial, legal, or tax advice. I am describing my own deal and the FHA rules in plain language so you can ask better questions. Loan programs change, and a lender’s overlays can be stricter than the handbook. Confirm the current rules with HUD and with a lender before you make an offer.