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Can a Chicago three flat make your own housing payment smaller?

Living in one unit and renting the others can offset a mortgage payment. The useful question is how much cash you would need after vacancy, repairs and the full cost of ownership.

By Eric Hamilton · Published October 6, 2026

Originally uploaded July 10, 2026 · 7:32 · Watch on YouTube

Written companion added October 6, 2026. Adapted from Eric’s video captions with source checks; not a word for word transcript. The recording retains its original date.

Read the $450 example as a starting point

The video illustrates a $550,000 three flat, a $4,650 monthly housing payment and two tenants each paying $2,100. The subtraction leaves $450. That is the payment gap before operating costs, not an all-in cost of living or a guaranteed return. One empty rental unit would increase that gap to $2,550 before repairs and other expenses. Replace the example rents with evidence for the actual building.

Separate the FHA test from your household budget

For an FHA three- or four-unit property, the self-sufficiency calculation includes the appraiser's estimated rent for every unit, including yours. HUD requires a deduction for the greater of 25% of market rent or the appraiser's vacancy and maintenance estimate. In the video's simplified example, $6,300 multiplied by 75% is $4,725. A larger required deduction could change the result. Your unit's estimated rent helps this test, but does not become cash in your checking account while you live there.

Keep cash for the building after closing

The illustrated 3.5% down payment is $19,250. Closing costs and required reserves are separate. Have the lender confirm eligibility, the applicable loan limit, permitted reserve sources and the documented rental income it can use. Then budget for maintenance, landlord insurance, utilities you pay, turnover and large replacements. The video mentions older roofs and boilers for a reason: a building can pass a financing test and still strain your budget.

Does passing the FHA self-sufficiency test guarantee a profitable rental?

No. It is a financing requirement. Actual collections, repairs and other expenses determine your cash flow.

Should I subtract all advertised rent from the mortgage when qualifying?

No. Let the lender calculate eligible rental income from the required documentation. Your personal budget and the loan qualification calculation serve different purposes.

Sources and scope

This companion explains the hypothetical example in the July 10, 2026 recording. The rent, payment and purchase price are not current quotes. An owner-occupied loan requires a genuine plan to occupy the property and compliance with its occupancy terms.

  1. HUD: FHA Handbook 4000.1, Update 18, self-sufficiency calculation Accessed October 6, 2026
  2. HUD: Current FHA policy handbook information Accessed October 6, 2026

General education, not a loan quote, approval or an individual recommendation. Ask the appropriate professional about your situation.

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