House Hacking Shifts to Long-Term Affordability
With higher rates and prices, house hacking is now a long-term affordability strategy, helping buyers offset costs and build equity rather than generate quick profits.
NEW YORK – House hacking — buying a property and renting part of it to offset the mortgage — was once considered a fast path to growing wealth for first-time home buyers. It allowed first-time buyers to build their home equity and pay off debt more quickly.
Today, it is being used as a long-term affordability strategy, rather than a short-term strategy to earn profits. Kathy Herig, senior vice president of enterprise credit policy at mortgage lender LoanDepot, told Realtor.com, "With today's higher home prices and elevated mortgage rates, it's shifting toward a long-term affordability strategy rather than a quick path to short-term profit."
With mortgage rates above 6%, the days of ultralow rates are gone, and house prices are expected to continue increasing. Realtor.com projects home prices to rise by 2.2% this year.
Michael Nouri, founder of real estate development firm Nouri Group, says that lenders are underwriting more conservatively, focusing on borrowers' ability to carry the mortgage without relying on full rental occupancy or optimistic projections.
“It’s no longer about living for free. It’s about making ownership workable. If rental income cuts a mortgage in half, that’s a win, even if it doesn’t eliminate it," Nouri told Realtor.com. "In many markets, that still puts the owner well below the cost of renting, while building equity instead of paying a landlord."
Rental income can still help reduce housing costs, but it no longer defines the deal where rental income could easily cover the entire mortgage payment. In 2026, successful house hacking depends on strong credit, cash reserves, realistic rent assumptions, and treating the approach as a way to control housing expenses while building equity over time.
Source: Realtor.com (01/26) Bizouati-Kennedy, Yael
© Copyright 2026 Smithbucklin