House hacking is buying a duplex, triplex or fourplex as your home, living in one unit and renting out the rest, so your tenants pay part of your housing cost. This page covers how the insured-mortgage rules make it possible with a small down payment, two worked examples, the tax treatment and the trade-offs. It is part of WealthNorth’s guide to real estate investing in Canada.
What is House Hacking?
| Scenario | Property Type | Your Unit | Rental Units | Concept |
|---|---|---|---|---|
| Basic house hack | Duplex | 1 unit | 1 unit | 50/50 split, one tenant |
| Standard house hack | Triplex | 1 unit | 2 units | Two tenants offset mortgage |
| Full house hack | Fourplex | 1 unit | 3 units | Maximum rent offset, still CMHC eligible |
| Large multi-family | 5+ units | Optional | All or most | Financed as a rental building, not a home |
A building of five or more units is financed as a rental building, through commercial lenders or CMHC’s separate multi-unit programs, not the homeowner insurance that makes house hacking work; see multi-family investing. House hacking is a two- to four-unit strategy.
Insured mortgage rules for owner-occupied multi-unit homes
| Property | CMHC maximum loan-to-value | Minimum down payment | Owner occupancy |
|---|---|---|---|
| Duplex (2 units) | 95% | 5% of the first $500,000 and 10% of the rest | Must live in one unit |
| Triplex or fourplex (3 or 4 units) | 90% | 10% | Must live in one unit |
Insured purchases must be priced under $1.5 million (the cap rose from $1 million on December 15, 2024), and the insurance premium is added to the mortgage. Above the cap, or if you won’t live there, the minimum is 20% down. How CMHC insurance premiums work is covered separately.
How lenders count the rent
Lenders count part of the expected rent from the other units when they qualify you, either by adding a share of it to your income or by subtracting a share from the property’s costs. They usually need a signed lease or an appraiser’s market rent estimate. The methods and typical shares are covered in how rental income affects mortgage qualification. Whether each unit is legal (permitted, with the fire separation and exits the building code requires) affects insurance, financing and resale; what makes a duplex legal covers the checks, and buying a duplex, triplex or fourplex covers the down payment and financing by number of units.
Worked example: a duplex
Illustrative assumptions: an $850,000 duplex bought with the minimum down payment, a 4.5% five-year fixed rate over 25 years, and $2,400 a month of rent from the second unit.
| Item | Amount |
|---|---|
| Minimum down payment (5% of $500,000 + 10% of $350,000) | $60,000 |
| Loan before insurance | $790,000 (92.9% loan-to-value) |
| CMHC premium (4.00% for 90% to 95% loan-to-value) | $31,600 |
| Insured mortgage | $821,600 |
| Monthly payment | $4,547 |
| Rent from the second unit | −$2,400 |
| Your mortgage cost after rent | $2,147 a month |
Property tax, insurance and upkeep come on top. The tenant’s rent covers part of the payment, which lowers your housing cost but doesn’t eliminate it.
Worked example: a triplex
Illustrative assumptions: a $650,000 triplex with the minimum down payment, the same rate and amortization, two units rented at $1,500 each, and $600 a month of property tax and insurance.
| Item | Amount |
|---|---|
| Down payment (10%) | $65,000 |
| CMHC premium (3.10% of $585,000 at 90% loan-to-value) | $18,135 |
| Insured mortgage | $603,135 |
| Monthly payment | $3,338 |
| Rent from two units | −$3,000 |
| Property tax and insurance | +$600 |
| Your housing cost after rent | $938 a month |
With two rents, the cost of living in your own unit falls to a fraction of the payment, before maintenance and vacancy. Where multi-unit prices are lower relative to rents, the numbers get closer to living for free; where they are higher, the duplex pattern is more typical. For a full income statement with vacancy and a maintenance reserve, use the rental property calculator.
Tax implications
- Rental income from the other units is taxable after expenses. Shared costs (mortgage interest, property tax, insurance, utilities) are split between your unit and the rented units, usually by floor area; see how rental income is taxed.
- Selling: the principal residence exemption covers the part you live in; the gain on the rented units is a capital gain. The rules for homes that are partly rented are in the principal residence exemption when you rent part of your home.
- Capital cost allowance on the rented units is optional and recaptured on sale; see CCA on rental property.
- GST/HST: long-term residential rent is exempt. Short-term stays of under a month are taxable once a host passes the $30,000 small supplier threshold.
Short-term rentals in a house-hacked property
Many cities, Toronto among them, allow short-term rentals only in the host’s own principal residence, which rules out a unit you don’t live in. British Columbia’s provincial rules are wider: the host’s home plus one secondary suite or accessory unit on the same property. Check Airbnb rules by city before counting on nightly income. The economics are compared in Airbnb vs long-term rental.
Pros and Cons
| Factor | Pros | Cons |
|---|---|---|
| Entry cost | Insured mortgage with a small down payment | Still large absolute dollar amounts in major cities |
| Cash flow | Tenants reduce or cover your housing cost | In high-priced cities the rent covers only part of the payment |
| Wealth building | Equity grows across full property | Concentrated in one illiquid asset |
| Lifestyle | Own your home with reduced carrying cost | You live next to your tenant: privacy trade-off |
| Financing | Residential rates apply (not commercial) | Must occupy; cannot rent all units |
| Scalability | First step toward larger portfolio | Must eventually move out to scale up |
Getting Started With No Experience
| Step | Action |
|---|---|
| 1 | Get pre-approved: ask specifically about multi-unit owner-occupied mortgages |
| 2 | Research zoning: search for legal duplex/triplex in target municipalities |
| 3 | Inspect carefully: multi-unit properties have more systems (HVAC, electrical, plumbing) |
| 4 | Review local rental market: vacancy, demand, achievable rents before you buy |
| 5 | Learn your province’s landlord and tenant law, including rent increase rules |
| 6 | Structure finances: keep rental income/expenses in a separate account from day one |
| 7 | Set reserves: budget 1% of property value/year for maintenance, 5% for vacancy |
Bottom line
House hacking is the lowest-down-payment way into rental property in Canada, because an owner-occupied two- to four-unit home qualifies for an insured mortgage. The rent lowers your housing cost and builds equity across the whole building, in exchange for living beside your tenants and taking on landlord work. It works best where multi-unit prices are moderate relative to rents. Moving out later turns the whole property into a rental, with tax consequences covered in converting a home to a rental; buying a larger building is covered in multi-family investing.
Sources
The figures and rules on this page come from these sources, last checked against them between September 24, 2026 and October 2, 2026. How we check facts.
- Bank of Canada: Conventional 5-year mortgage rate (data series)
- Bank of Canada: Conventional 5-year mortgage rate (data series)
- Bank of Canada: Conventional 5-year mortgage rate (data series)
- Bank of Canada: Data table
- Canada Revenue Agency: When to register for and start charging the GST/HST
- CMHC: CMHC Purchase
- CMHC: Home Start
- Department of Finance Canada: Boldest mortgage reforms in decades come into force today
- Financial Consumer Agency of Canada: How much you need for a down payment
- Justice Laws (Canada): Bank Act