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House Hacking in Canada: Live for Less by Renting Out the Rest

Q: What down payment do I need to house hack in Canada?

As an owner-occupant: 5% for a duplex (10% above 500,000 dollars) and 10% for a triplex or fourplex, versus 20% for a non-occupant investor.

In brief — House hacking means buying a multiplex, living in one unit and renting the others so the rent covers much — sometimes all — of your housing cost. Living in the property also unlocks a lower down payment: 5% for a duplex, 10% for a triplex or fourplex.

Paying your mortgage with your neighbours' rent is the idea behind house hacking — often the most accessible way to start investing in Canada, because it bundles a home and a first investment into one purchase.

The idea

Buy a small multiplex, live in one unit, rent the others. The rent you collect offsets part (or all) of your mortgage, taxes and expenses. Your real housing cost drops, and your tenants help pay down your loan while you build equity.

The down-payment advantage

As an owner-occupant, your minimum down payment is far lower than an investor's:

Duplex: 5% (10% on the portion above $500,000).
Triplex or fourplex: 10%.
A non-occupant investor pays 20%.

Living in the building is the difference between starting with 5–10% and 20%. See our guide to down payment for a rental property in Canada.

A simple example

Illustrative case: a triplex bought for $600,000; you live in one unit, the other two rent for $1,300 a month each ($2,600 total). That rent absorbs a large share of your mortgage and taxes, so your net housing cost becomes a fraction of renting the same space. The exact figures depend on your rate, expenses and vacancy — which is precisely what to calculate before you buy.

The tax angle

House hacking blends two regimes in one property:

The unit you occupy can be treated as your principal residence — useful for a partial principal residence exemption on the capital gain at sale. See capital gains on a rental property.
The rented portion produces taxable rental income, with deductible expenses and optional depreciation (mind the recapture at sale: see CCA recapture).

The split is usually pro-rated by area. Getting it right from day one avoids surprises later.

Pitfalls to avoid

Underestimating expenses: taxes, maintenance, vacancy (3–5%), management. A "free" house hack on paper can cost real money once everything is in.
Living too close to tenants without clear leases and rules — proximity helps management but needs boundaries.
Forgetting the exit tax: the rented portion is subject to capital gains and recapture. Judge the deal on after-tax return, not just today's cashflow.

Run the numbers first

A house hack lives or dies on net figures: real rents, full expenses, occupied vs rented share, tax. DeedWorth computes cap rate, cashflow, tax and a 10-year projection so you know, before you offer, whether the property truly houses you at a discount. Analyze a property with DeedWorth →

FAQ

What is house hacking? It means buying a multi-unit property, living in one unit and renting the others. The rent reduces your housing cost and pays down your mortgage while you build equity.

What down payment do I need to house hack in Canada? As an owner-occupant: 5% for a duplex (10% above $500,000) and 10% for a triplex or fourplex, versus 20% for a non-occupant investor.

Is house hacking taxable? The rented portion produces taxable rental income; the unit you live in can be treated as your principal residence. The split is pro-rated by area.