Most people think of 'investment property' and 'first home' as two totally separate things. You buy your first home, live in it for a while, and maybe someday, if things go well, you buy a rental.
But there's a strategy that lets you do both at the same time, and it's one of my favorite things to talk about with first-time buyers. It's called house hacking, and the idea is simple: buy a property with 2 to 4 units, live in one of them, and rent out the others.
Why this works so well
When you live in the property, the lender treats it as your primary residence, not an investment. That's a big deal, because primary residence loans come with much smaller down payments and better rates than investment property loans.
Here's what that looks like:
- FHA: as little as 3.5% down on a 2 to 4 unit property you live in.
- Conventional (Fannie Mae): as little as 5% down on a 2 to 4 unit property you live in. This used to require 15% to 25% down, so it's a relatively recent change and a huge one for buyers!
- VA: eligible veterans can buy a 2 to 4 unit property with 0% down.
Compare that to buying the same property as a pure investment, where you'd typically need 20% to 25% down.
And the loan limits are much higher for multi-unit properties. In the Portland area, the 2026 conforming limit for a single-family home is $832,750, but for a duplex it's over $1 million.
The rent from the other units helps you qualify
This is the part that makes it click for a lot of people. Lenders will generally let you count 75% of the expected rent from the other units as income (the 25% haircut accounts for vacancies and upkeep). So, the tenants are literally helping you qualify for the loan.
There's one extra hoop with FHA on 3 and 4 unit properties called the 'self-sufficiency test.' Basically, 75% of the total rent from all units (including yours) has to cover the full monthly payment. At today's rates, that can be tough to pass. Duplexes are exempt, and Fannie Mae's 5% down option doesn't have this test at all, so there are ways around it.
Let's run the numbers
Say you buy a $650,000 duplex in Portland with FHA and 3.5% down ($22,750). Using today's average rate of 7.40% for illustration:
- Principal and interest: about $4,343 monthly.
- Property taxes (est.): about $596.
- Insurance (est.): about $150.
- FHA mortgage insurance: about $287.
- Total payment: about $5,376.
- Rent from the other unit: minus $1,900.
- Your net housing cost: about $3,476.
Now, I'm not going to sugarcoat it... that net cost is more than you'd pay renting a 2-bedroom apartment in Portland (which averages a little over $2,000). At 7%+ rates, house hacking in Portland usually isn't free housing like you might see on social media.
But look at what you're getting for that extra money. You're building equity on a $650,000 asset with $22,750 down. You're getting appreciation on the whole building. Your tenant's rent will likely go up over time while your principal and interest stays fixed. And after a year (the typical owner-occupancy requirement), you can move out, rent your unit too, and turn the whole thing into a full rental property that you bought with an owner-occupied down payment.
A few things to know before you jump in
- You have to actually live there. Owner-occupancy is a legal requirement, typically for at least a year. This isn't a loophole for buying rentals with 3.5% down while living somewhere else.
- You're a landlord now. Portland has some of the more detailed tenant protection rules in the region (including relocation assistance requirements in some situations), so it's worth learning the rules or hiring a property manager.
- Look at the condition closely. Older Portland duplexes and fourplexes can come with deferred maintenance. Get a thorough inspection and a sewer scope, and budget for repairs.
- Don't count on more rent than the market supports. The appraiser will estimate market rents, and that's the number your lender will use.
Bottom line
If you're a renter who wants to buy but also wants to start building toward real estate investing, house hacking is one of the best ways to do both at once. The math is tighter at today's rates than it was a few years ago, but the long-term payoff can be significant.
If you want to see what this would look like on a specific property (or what price range makes sense for you), send it my way and I'll run the numbers.
Example is for illustration only and is not a loan quote. FHA loans carry upfront and annual mortgage insurance; this example excludes the upfront premium. Taxes and insurance are estimates. Actual rates for FHA and other programs vary. Rental income used for qualifying is subject to appraisal and lender guidelines. Owner-occupancy requirements apply.
Want this run on your actual numbers?
Everything above is a worked example. Give me your real figures and I'll tell you what it looks like for you, with no application and no credit pull.