1. Pick your strategy
Rent by the room
Lowest cost to get in.
Basement or ADU
Your own space plus rent.
2-4 units
Most rental income.
| Strategy | Privacy | Cost to get in | Rent potential | Watch out for |
|---|---|---|---|---|
| Rent by the room | Low (shared kitchen) | Lowest | Medium | Picking good roommates |
| Basement unit or ADU | Medium-high | Medium | Medium-high | Egress windows, permits, separate entrance |
| Duplex to fourplex | High | Higher price, 3.5-5% down | Highest | Few listings, higher prices |
2. Pick your loan
- FHA: 3.5% down on 1-4 units you live in, more flexible credit. Has mortgage insurance.
- Conventional 5% down on 2-4 units: Fannie Mae allows 5% down on owner-occupied duplexes, triplexes and fourplexes.
- Conventional 3-5% down on a single-family home: good for rent-by-the-room or basement plans.
- VA: $0 down for eligible veterans and service members on 1-4 units you live in.
Details: FHA, VA & 5% down house hack loans.
3. Know the Colorado rules
- Occupancy limits (HB24-1007): since July 1, 2024, cities cannot cap how many unrelated people live together; limits must come from health and safety codes.
- ADUs (HB24-1152): since June 30, 2025, larger Front Range cities must allow one ADU on single-family lots, approved administratively; HOA bans on ADUs are void there.
- Your city still decides: rental licenses, short-term rentals, permits, egress and fire codes.
Details: Colorado rules for house hackers.
4. Pick the right home
- Extra bedrooms on their own floor or a finished basement with a separate entrance
- Legal bedrooms: egress windows and permits for finished basements
- Parking and a layout that gives everyone some privacy
- HOA rules on rentals and leasing
- Real rents nearby that make the numbers work
5. Run the numbers
Add up principal, interest, taxes, insurance, mortgage insurance, HOA and the utilities you pay. Subtract realistic rent minus a reserve for vacancy and repairs. What is left is what you really pay to live there. Our calculator does this for you.
6. Be a good landlord
- Use a written lease and follow Colorado fair housing and security deposit rules
- Screen every renter the same way
- Keep records for taxes and ask a CPA how rental income and expenses work for you
House hacking by city
Questions people ask
What is the best house hack for a first-time buyer in Colorado?
For most first-time buyers, renting rooms in a 3-5 bedroom home or a home with a basement unit is the easiest start because there are many more single-family listings than duplexes. If you want the most rent and more privacy, a duplex to fourplex with 3.5-5% down is worth a look.
How long do I have to live in a house hack?
Owner-occupied loans usually require you to move in within about 60 days and live there as your main home for at least a year. After that many people move and keep it as a rental.
Do Colorado cities allow renting rooms to unrelated people?
Since July 1, 2024 Colorado cities cannot limit how many unrelated people live together based on family relationship. Occupancy can still be limited by building, fire and health codes.
Can I build an ADU on my Colorado lot?
In the larger Front Range cities covered by HB24-1152, one ADU must be allowed on single-family lots since June 30, 2025, with permits and codes still required. Check with your city before you buy.
See your real numbers in 2 minutes
Plug in a price and rents and see what you would really pay to live there. Then book a free 30-minute strategy call with Simon or Ewelina.
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