If you have good credit, HomeReady/HomePossible are excellent programs, requiring only 3% down will still offering low MI rates. 

You’re saying they are “low income”.

It earned $4,419.15 in Airbnb income between mid-August and November 2024 before transitioning to a long-term tenant.The current tenant has been in place since December 2024, paying $1,400/month on a month-to-month lease.

Welcome to BiggerPockets Tanisha and best of luck house hacking!

A few thoughts based on your questions:Active vs. passive income for STRs:STR income can often be treated as active if the average guest stay is 7 days or less and you materially participate (which you already do, based on your involvement in cleaning, minor repairs, etc.).

House hacking is a smart first move! 

If its passive and your income is above $150,000, you may want to continue withholding as normal as the rental activity will not reduce your taxable income.If you are able to claim REPS or if its a STR treated as active for tax purposes, you may potentially be able to reduce your taxable income and you may want to see if its possible to reduce your withholding.Have a conversation with your tax accountant before proceeding to reduce your withholding.

I would have a separate bank account for your property and track all of the income and expenses through that account.

We primarily rent single family detached houses in neighborhoods with good schools, low crime and mostly owner occupied neighborhoods. 

I made the decision to get into investing by starting out with a house hack but I only qualify for FHA financing due to having fair, but not bad credit and a higher debt to income ratio.