How to Rent Out a Room in Your House
Quick Answer
To legally rent out a room in your house, you need a written room rental agreement, must comply with local zoning and housing codes, report the rental income on your taxes, and should verify that your homeowner's insurance and mortgage allow it.
Step-by-Step Guide
- 1Check your mortgage and HOA restrictions
Many mortgage agreements and HOA covenants restrict or prohibit renting out rooms. Review your mortgage contract for owner-occupancy requirements (common with FHA and VA loans, which typically require the owner to occupy the home as a primary residence for at least 12 months). Check your HOA bylaws for rental restrictions, which may limit the number of tenants or require board approval.
- 2Verify local zoning and occupancy laws
Contact your local zoning or planning department to confirm that renting a room is permitted in your area. Some residential zones limit the number of unrelated occupants (commonly two to four in many municipalities). You may also need a rental permit or business license. Building codes establish minimum room sizes (typically 70 square feet), ceiling heights, and egress window requirements for bedrooms.
- 3Update your insurance coverage
Notify your homeowner's insurance company that you will have a tenant. Standard homeowner's policies may not cover injuries to tenants or damage caused by tenants. You may need to add a landlord endorsement or switch to a landlord policy. Also require your tenant to obtain renter's insurance to cover their personal belongings and provide additional liability protection.
- 4Screen potential tenants
Run a background check and credit check on potential tenants, even if they are friends or acquaintances. Verify employment and income (a common standard is that monthly income should be at least three times the rent). Check references from previous landlords. As an owner-occupant landlord, you may have broader discretion in selecting tenants under the Fair Housing Act's Mrs. Murphy exemption (for owner-occupied buildings with four or fewer units), but you still cannot discriminate based on race or color under the Civil Rights Act of 1866.
- 5Create a written room rental agreement
Draft a room rental agreement that specifies: the rent amount and due date, which areas of the home are shared versus private, utility cost sharing arrangements, rules about guests, quiet hours, parking, smoking, and pets, the security deposit amount, the lease term or notice period for month-to-month arrangements, and which appliances and furnishings are included.
- 6Understand the tax implications
Report all rental income on your tax return. You can deduct a proportional share of expenses based on the percentage of your home that is rented (square footage of the rented room divided by total home square footage). Deductible expenses include that percentage of mortgage interest, property taxes, utilities, insurance, repairs, and depreciation. Keep detailed records of all income and expenses.
State-by-State Differences
| State | Key Difference |
|---|---|
| California | Owner-occupied single-family homes renting a single room may be exempt from the Tenant Protection Act (AB 1482) if proper written notice is provided, but standard landlord-tenant protections under Cal. Civ. Code still apply. Some cities (San Francisco, Los Angeles, Berkeley) have additional rent control and just-cause eviction protections that may cover room rentals. |
| Texas | Texas has no statewide rent control, and room rentals are governed by standard landlord-tenant law (Tex. Prop. Code Chapter 92). Landlords renting rooms in owner-occupied homes should still use written agreements and follow eviction procedures. Local zoning varies significantly between municipalities. |
| Florida | Room rentals in owner-occupied homes are subject to Florida's Residential Landlord and Tenant Act (Fla. Stat. Chapter 83, Part II). Florida has no statewide rent control. Some counties require rental registration or inspections. The landlord must follow formal eviction procedures even for room rentals. |
| New York | New York provides strong tenant protections that apply to room rentals. In New York City, roommates are protected under the Roommate Law (N.Y. Real Prop. Law 235-f), which allows tenants to have at least one additional occupant. Illegal room conversions (renting cellars or attics not meeting housing code) carry significant fines. |
| Illinois | Room rentals are subject to Illinois landlord-tenant law. In Chicago, the Residential Landlord and Tenant Ordinance applies to most room rentals and requires specific lease provisions, security deposit handling, and notice procedures. Violations can result in penalties of two months' rent plus attorney fees. |
Common Mistakes to Avoid
Not informing your homeowner's insurance company about the tenant
Consequence: If your tenant is injured or causes a fire, your insurance company may deny the claim because you failed to disclose the rental arrangement. You could be personally liable for medical bills, property damage, and legal fees that could total hundreds of thousands of dollars.
Renting out a room that does not meet building code requirements
Consequence: Bedrooms must meet minimum standards for size, ceiling height, ventilation, and emergency egress. Renting a non-compliant room (such as a basement without proper egress windows) can result in fines, an order to vacate, and significant liability if the tenant is injured in an emergency.
Not having a written agreement about shared space usage
Consequence: Without clear rules about kitchen use, bathroom schedules, guest policies, and noise, conflicts are inevitable. Disputes about shared spaces are the number one reason room rental arrangements fail, and without written terms you have no enforceable standard to point to.
Failing to report rental income on your taxes
Consequence: The IRS requires all rental income to be reported. If discovered during an audit, you will owe back taxes, interest (currently around 8% annually), and potentially a 20% accuracy penalty or 75% fraud penalty on the unreported income.
Documents You'll Need
Room Rental Agreement
Lease Agreement
Rental Application
Frequently Asked Questions
Related Guides
This website provides legal information, not legal advice. The information on this page is for general informational purposes only. No attorney-client relationship is formed by using this site. Laws vary by jurisdiction and change frequently. For advice specific to your situation, consult a licensed attorney in your state.