House hacking: the legitimate low-down-payment path to your first rental

The core idea

Owner-occupied government-backed loans — the ones with the small down payments — allow properties up to four units, as long as you live in one of them. So instead of 15-25% down on an "investment property," you can buy a duplex, triplex, or fourplex with:

• FHA: 3.5% down — live in one unit for at least a year.
• VA: 0% down — for eligible veterans, same owner-occupancy rule.
• Conventional HomeReady/Home Possible: low down payments on 2-4 units for qualifying incomes.

Your tenants' rent then covers some or all of the mortgage. You're building equity in a property someone else largely pays for, while learning landlording with the shortest possible commute.

The rules and gotchas — honestly

• You must actually live there (typically one year minimum). Lying about occupancy is mortgage fraud — not a gray area.
• FHA's self-sufficiency test on 3-4 units:the property's total market rent must cover the full mortgage payment by a set margin. Duplexes skip this test, which is why most first house hacks are duplexes.
• FHA mortgage insurance (MIP) adds to the payment and, unlike PMI, usually sticks around at low down payments until you refinance.
• Lenders count a portion of market rent (usually ~75%) toward your qualifying income — the property helps you qualify for itself.
• Landlording is a job.Budget vacancy and maintenance from day one — our rental calculator defaults to 8% each because pretending they're zero is how first rentals fail.

Why Kentucky is a good place to do this

The math works best where small multi-units sell at prices local rents can actually support — which describes much of Kentucky far better than the coasts. In markets like Owensboro, duplexes regularly trade at prices where one unit's rent covers a meaningful share of the whole mortgage. Run any specific deal through our rental property calculator before you fall in love with it.

Step by step

1. Check your buying power with the affordability calculator, then get pre-approved (tell the lender it's an owner-occupied 2-4 unit).
2. Veterans: pull your Certificate of Eligibility — 0% down beats 3.5%.
3. Shop 2-4 unit listings; expect to find properties needing cosmetic work — that's where the value is.
4. Estimate the rehab before you offer (free, from us) and run the deal through the rental calculator.
5. Inspect thoroughly — you're buying the roof, wiring, and plumbing for every unit.
6. Close, move in, lease the other units, and keep reserves for the first surprise repair.

About that "SBA apartment building" idea

You may have seen claims about buying apartment buildings with 10% down using SBA loans. SBA loans exclude passive rental real estate— that strategy doesn't exist as advertised. What SBA 504/7(a) loans dobrilliantly: help a business buy the building it operates from with ~10% down. If you're a contractor renting a shop, that's the loan worth knowing about.