Homeowner Costs · Rental Conversion

What It Really Costs to Turn Your Home Into a Rental

Renting out the house you live in now is rarely as simple as finding a tenant. This guide walks through the insurance, mortgage, tax, and repair costs that show up along the way, so you can budget before you list it.

By the GoCheckMyHome desk. Honest homeowner cost and maintenance education, sources cited. Updated September 23, 2026.

The plain-English answerConverting a primary residence into a rental almost always costs more than expected once you add landlord insurance, possible mortgage review, rent-ready repairs, and new tax paperwork, so price those four items before you list the home.

In this guide

Why the sign in the yard is the cheapest part of this move
Your homeowners policy stops covering the house once a tenant moves in
Your mortgage terms may require you to tell the lender first
Some property tax bills only stay low while you live in the home
Getting the house rent-ready costs money before the first rent check
The tax return gets more complicated once rent starts coming in
Build in a cushion for the costs that do not show up on a checklist

Most homeowners picture the conversion in one step: find a tenant, collect rent, done. The costs that actually surprise people show up earlier than that, in a renewed insurance policy, a call to the mortgage servicer, a repair list, and a tax return that suddenly needs a new form. None of these costs are the same for every homeowner, because they depend on the loan you have, the insurer you use, and the condition of the property.

This article walks through each cost category so you know what to check before you rent the house out, not after.

The sign in the yard is the cheapest part of turning a home into a rental.

Your homeowners policy stops covering the house once a tenant moves in

A standard homeowners policy is written around the assumption that you live in the home. Once a tenant is the one living there, insurers generally expect you to carry a landlord policy instead, which covers the building and your liability as a landlord but not the tenant's own belongings. According to the Insurance Information Institute, landlord policies typically cost more than a comparable homeowners policy because the insurer is covering a property nobody is watching day to day.

Before you rent the home out, call your current insurer and ask directly whether your existing policy still applies. If it does not, get a landlord policy quote so the new premium is part of your rental budget, not a surprise at renewal.

Your mortgage terms may require you to tell the lender first

Many conventional loans include an owner-occupancy requirement, meaning you agreed to live in the home for a set period after closing. Loans backed by HUD's FHA program generally require the property to be your primary residence, so converting it to a rental while that loan is active can put you out of compliance with the loan terms.

Fannie Mae and Freddie Mac, the two companies that buy most conventional mortgages from lenders, publish occupancy guidelines that lenders use to decide whether a loan needs to be reviewed or refinanced once a home stops being owner-occupied. Check your loan documents or call your servicer before you sign a lease, since some loans require a formal notification or a different loan product once the home becomes a rental.

Some property tax bills only stay low while you live in the home

A number of states and counties offer a lower property tax rate or a homestead exemption, a tax break tied to the property being your primary residence, and that break can end once the home is rented out. The rules vary by state and county, so this is worth a direct call to your local tax assessor's office rather than a guess. Losing an exemption you were counting on can change the monthly math on renting significantly, so it belongs in your budget before you commit, not after the first tax bill arrives.

Getting the house rent-ready costs money before the first rent check

Rental property usually needs to meet a higher bar than a home you live in yourself, because a tenant is trusting the place to be safe and functional on day one. That can mean working smoke and carbon monoxide detectors, secure locks, functioning heat and plumbing, and repairs to anything you had been living around, like a slow leak or a cracked step.

If the home was built before 1978, EPA rules require landlords to disclose known lead-based paint hazards to tenants before they move in, which may mean an inspection or disclosure paperwork depending on the home's condition. A contractor or inspector can tell you what the home specifically needs before it goes on the rental market.

If you are unsure how much work the house needs, the free home report is a starting point for seeing where the property stands before you spend money on repairs. This article is not professional contractor, insurance, or engineering advice.

The tax return gets more complicated once rent starts coming in

Rental income has to be reported, but so do many of the costs of running the rental, including repairs, insurance, and depreciation, an annual deduction for the wear and tear on the building over time. The IRS's guidance on residential rental property covers what counts as a deductible expense and how depreciation is calculated once a home changes from personal use to rental use.

This shift also changes your basis, the number used to calculate gain or loss when you eventually sell the property, which matters if you plan to sell the rental down the road instead of keeping it long term.

Build in a cushion for the costs that do not show up on a checklist

Beyond insurance, mortgage compliance, repairs, and taxes, renting a home carries ongoing costs that are easy to underestimate: vacancy between tenants, a property manager's fee if you do not want to handle tenant calls yourself, and routine maintenance that a landlord is expected to keep up with.

Before you commit to becoming a landlord, it is worth running the numbers against your other option, which is selling the home outright. The sell-or-rent calculator can help you compare the two paths side by side using your own numbers. And if ongoing repair costs are the part that worries you most, the honest home warranty guide explains what a warranty plan does and does not cover for a rental property.

Questions people ask

Do I have to tell my mortgage lender I'm renting out my home?
It depends on your loan. Many conventional loans and FHA loans include owner-occupancy terms, so converting the home to a rental while that loan is active can require notifying the servicer or refinancing. Check your loan documents or call your servicer directly before you sign a lease.

Will my property taxes go up if I convert to a rental?
In places with a homestead exemption or an owner-occupant tax discount, yes, the bill can increase once the exemption no longer applies. Rules vary by state and county, so contact your local tax assessor's office to find out how a rental conversion affects your specific bill.

Can I keep my homeowners insurance once I rent the house out?
Usually not without checking first. Most insurers expect landlords to carry a landlord policy once a tenant occupies the home, since a standard homeowners policy is built around owner-occupancy. Ask your insurer directly rather than assuming your current policy still applies.

What tax deductions can I take once my home becomes a rental?
Common deductions include repairs, insurance, mortgage interest, and depreciation, though the specifics depend on your situation. The IRS's guidance on rental property covers what qualifies and how to calculate depreciation once a home shifts from personal to rental use.

Sources

Work out what the house actually costs a year

This article is educational and is not professional contractor, insurance, or engineering advice. Some links in our articles may earn us a commission at no cost to you, and never change what we recommend.