House Hacking Starter Guide

Why it’s the cheapest entry into real estate

On a $300,000 duplex, the difference between 3.5% and 20% down is nearly $50,000 of cash. FHA’s 203(b) program covers one- to four-unit properties as long as you occupy one unit as your primary residence, and Indiana’s loan limits sit near the floor — nearly every central Indiana property qualifies.

The trade is simple: you accept living beside your tenants for at least a year, and in exchange you buy an income-producing asset with the cheapest financing that exists in real estate. After twelve months of occupancy you can repeat the strategy on a new property with a new owner-occupied loan.

The qualifying math at your lender

• Most lenders credit about 75% of documented rental income from the units you won’t occupy toward qualifying — a $1,500 duplex unit counts as roughly $1,125 of monthly income.
• Documentation matters: an existing lease is strongest; otherwise the lender uses the appraiser’s market-rent estimate.
• FHA duplexes skip the self-sufficiency test that applies to 3–4 unit properties (where market rents must generally cover the full payment) — one reason duplexes are the beginner’s classic.

Indianapolis numbers to plug in

• Average rent across Indianapolis is roughly $1,500 a month; duplex sides in solid near-downtown neighborhoods commonly rent in the $700–$1,100 range per unit.
• Pull actual parcel taxes from the county auditor — never the listing’s guess.
• Budget for owner-carried water, sewer, and trash, plus PMI (roughly 0.5–1% per year) if you’re under 20% down on a conventional loan.

Reading your own numbers

• A strong house hack covers at least half your payment while you live there; above 80% you’re nearly living free.
• Scrutinize the move-out math hardest: if cash flow after you leave is negative at today’s rents, the deal only works as an appreciation bet.
• Rerun every number with rents 10% lower before you commit.