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House Hacking Calculator — Side-by-Side Scenario Analysis
House hacking is the practice of purchasing a property with a rentable attached unit (NextGen suite, ADU, basement apartment) and using rental income to offset the mortgage — while qualifying for owner-occupant financing rates and down payment requirements. This calculator runs six simultaneous scenarios from the same starting capital pool and provides professor-level analysis of every material financial variable: IRR, leverage decay, HELOC strike windows, depreciation recapture liability, and real vs. nominal returns.
- S1–S5 are buying scenarios with different financing structures. S6 is the renting baseline — investing all capital at your assumed market return.
- Tax effects use actual Schedule E / Schedule A allocation. No dollar is deducted twice.
- ARM projects Year 6+ payment at worst-case cap (5/2/5 structure). Fixed-rate scenarios support the 2-1 temporary buydown.
Calculating...
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Side-by-Side Scenario Comparison — All Numbers Year 1 Unless Noted
Toggle Rental or Buydown per scenario using the buttons in each column header. Best value in each row highlighted in yellow. ★ = illiquid/unrealized.
Ready
6 scenarios computed
📈Charts — Overview: Monthly Cost & 5-Year Wealth
Effective Monthly Housing Cost
Gross outlay minus rental income minus monthly tax benefit. Lower = better.
5-Year Cumulative Wealth Accumulation
Includes unrealized appreciation and illiquid equity — real liquid wealth is lower.
💰Charts — Capital Allocation & Cash Flow Bridge
Capital Deployment at Closing
Every dollar in the down payment is a dollar not compounding in the portfolio.
S1 Cash Flow Waterfall (Rental ON)
From gross outlay to effective cost after tenant rent + tax benefits.
⚖Charts — Break-Even Analysis
S1: At What Rent Does Cash Flow Turn Positive?
Monthly net cash flow vs. rent level. Cross the zero line = cash-flow positive.
Break-Even Appreciation: S1 & S3 vs. S6
Minimum appreciation for each buying scenario to beat renting + investing. Your assumed rate vs. required rate = margin of safety.
📉Charts — IRR & Debt-to-Income
5-Year Internal Rate of Return (IRR)
All cash flows, tax effects, and exit proceeds net of selling costs and depreciation recapture.
Front-End DTI: 5-Year Trend as Income Rises
28% = ideal. 43% = most lenders' ceiling. FHA counts 75% of projected rental income in qualifying income.
🏦Charts — Equity Build-Up, Leverage Decay & HELOC Timeline
Equity Table — 5-Year S1 vs S3 vs ARM
| Year | Home Value | S1/S2 Loan | S1 Equity | S3 Loan | S3 Equity | S4 ARM Loan | S4 Equity | Gain vs Day 0 |
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Return on Equity — Leverage Decay (20 Years, S1)
Year 1 ROE is explosive due to high leverage. As equity builds, ROE decays toward your portfolio return. This is the optimal HELOC/refi trigger point.
HELOC Availability: When Can You Strike on Property #2?
80% CLTV limit on available credit. Appreciation accelerates the strike window dramatically.
🧾Charts — Tax Liability, Stress Test & Consumption Split
Depreciation Recapture: The Growing Phantom Tax Liability
Every year you claim depreciation, a 25% federal tax clock ticks on that amount at sale. 1031 exchange defers this permanently.
Stress Test: S1 5-Year Wealth Under Adverse Conditions
How much of S1's advantage holds up under vacancy shock, zero appreciation, and both simultaneously?
Consumption vs. Investment Split — What Are You Actually Paying For?
Consumption = equivalent rent for shelter you'd buy anyway. Investment premium = additional cost to own vs. rent equivalent space. Negative = property subsidizes your housing.
⚠ARM 5/1 Rate Projection — Worst Case (5/2/5 Caps) vs. Base Case
ARM Monthly P&I Projection (30-Year Timeline)
Worst case: hits 5% initial cap at Year 6, then 2%/yr caps up to lifetime limit. Base case: rate stays flat (index doesn't move).
Real vs. Nominal 5-Year Wealth (Inflation Adjustment)
At your assumed inflation rate, nominal wealth overstates purchasing-power gains. The gap is the inflation illusion.
📝Methodology & Assumptions