What if your DC rowhouse could help pay your mortgage? If you have thought about renting a basement apartment or living in one unit and renting the other, you are not alone. Many DC owners use house hacking to make homeownership more affordable without sacrificing location or lifestyle. In this guide, you will learn how the strategy works in Washington, DC, the rules to check, common financing paths, and a simple way to model your rent offset. Let’s dive in.
House hacking means you live in the home and rent part of it for income. In DC rowhouses, the most common setups are an English or garden basement apartment, a legal two-unit property where you live in one unit, renting individual bedrooms, or limited short-term rentals. The key question is whether the space is a legal separate dwelling. Legal status affects financing, safety and fire requirements, taxes, and resale.
A basement apartment is one of the most common options in DC. You can often add a separate entrance and attract steady demand. The tradeoffs include meeting code for safe egress, ceiling height, ventilation, and natural light. You also want to assess moisture control, utilities, and whether any work needs permits to be a legal rental.
If the property is already a legal two-unit, the path is simpler. You can use owner-occupant two-unit financing and keep utilities and entries separate. If you plan to convert a single-family rowhouse to two units, expect building permits, fire separation requirements, and possibly a Certificate of Occupancy to document the legal unit count. Appraisers and lenders look for this documentation.
Renting one or more bedrooms can be a lower-cost way to start. You may not need the same level of permits as a full unit conversion. That said, you should review occupancy limits, use clear roommate agreements, and plan for more day-to-day management. Shared utilities and common spaces also need clear rules in your lease.
Short-term rentals have their own registration and tax rules in DC. Before you count on this income, confirm you can license the activity and carry the right insurance. Some properties and associations limit or prohibit short-term use. Treat this as a separate strategy and verify all requirements in advance.
Owner-occupant financing can make a two-unit or house-hack purchase more accessible than a pure investment loan. Your loan type, the property’s legal status, and the condition of the rental space all factor into approvals, down payments, and rates.
FHA loans can finance 1–4 unit properties when you live in one unit. They are popular with first-time buyers because of historically low down payment options. If the home needs repairs or you plan to finish a basement, FHA 203(k) can let you finance the purchase and renovation together. Lenders will apply FHA rules when counting projected rent.
If you are eligible for a VA loan, you can use it for an owner-occupied multi-unit property, typically up to four units. VA terms are often favorable. You must occupy one unit as your primary residence. Lender guidelines will explain how much projected rent can offset your mortgage.
Conventional loans from Fannie Mae and Freddie Mac support owner-occupied two-unit purchases with competitive terms. Down payment requirements can be different from single-family homes. If you need upgrades, a conventional renovation program such as Homestyle can wrap improvements into one loan. Lender overlays and debt-to-income rules vary, so it pays to compare.
When you need to create or legalize a rental space, renovation loans can bridge the gap. FHA 203(k) and conventional renovation options are the most common. Some local banks or credit unions also offer portfolio loans for nonstandard scenarios. Ask how the lender handles draws, timelines, and contingency reserves.
DC’s rules protect safety and tenant rights. Your success depends on getting the legal details right. Plan early for permits, inspections, and landlord responsibilities so your financing, leasing, and resale stay on track.
Whether a space counts as a separate dwelling depends on code compliance for egress, ceiling height, light and ventilation, and zoning. Converting a basement to a rental usually requires plans, building permits, and inspections. You may need a Certificate of Occupancy or other documentation to prove the legal unit count. Confirm requirements with the relevant DC building department before work starts.
DC generally requires rental registration and compliance with housing and building codes. Expect minimum habitability standards and rules around security deposits, notice periods, and eviction procedures. Tenant protections are robust, so use proper lease forms and follow timelines. This is key for long-term stability and resale value.
Many DC rowhouses were built before 1978, so lead-based paint rules apply. If you plan renovations that disturb painted surfaces, use contractors trained in lead-safe practices under the federal Renovation, Repair, and Painting rule. Keep documentation of the work and share required disclosures with tenants.
Separate utility meters simplify billing, but they are not always required. If utilities are shared, address usage and cost in your lease and in your rent model. Rental income is taxable, and you can generally deduct allocable expenses such as mortgage interest, insurance, taxes, repairs, and depreciation for the rental portion. Work with a CPA to allocate costs correctly and to understand how renting part of your home could affect property tax programs or future capital gains. Review insurance with your agent, since a standard homeowner policy may not cover rental activity. Ask for an owner-occupied landlord policy that fits your setup.
A simple framework keeps you honest about costs and cash flow. Start with your total monthly housing outlay, then calculate net rent after vacancy and operating costs. The rent offset is the share of your housing cost that the rental covers.
Mortgage principal and interest: $____
Property tax: $____
Insurance: $____
HOA or other fixed costs: $____
Total housing cost: $____
Expected gross rent: $____
Vacancy allowance (5–10%): -$____
Unit operating expenses you pay (utilities, repairs, management): -$____
Replacement and capital reserve (5–10% of rent): -$____
Net rental income: $____
Rent offset = Net rental income / Total housing cost
Purchase price: $600,000 with an illustrative mortgage payment of about $2,045 per month
Taxes and insurance: $600 per month
Total housing cost: about $2,645 per month
Basement gross rent estimate: $1,200 per month
Vacancy at 7%: -$84 → adjusted rent $1,116
Unit expenses at 15% of gross: -$180
Net rental income: about $936 per month
Rent offset: $936 divided by $2,645 is roughly 35%. Your numbers will vary by neighborhood, condition, and loan terms. Be conservative with vacancy and expense assumptions and include a capital reserve for system replacements.
If you want a clear, step-by-step plan for house hacking a DC rowhouse, you do not have to figure it out alone. A focused consult can clarify legal status, financing paths, renovation scope, and realistic rent. If you are curious about whether an English basement or a two-unit makes sense for your budget, reach out to schedule a personalized walkthrough and numbers review with Stephanie Bredahl.
Stephanie has worked with clients in all price ranges and has successfully executed many complex transactions.