1. House - it would be the first definition
2) Hip does not sound right with 'house'.
3) The problem with 'hip' is that it is pretty old fashioned, more 1970s language, so if it is used these days it is to create a deliberate (usually tongue in cheek) effect. To me, funky also implies something brightly coloured or brightly patterned as well as the other words in definition one..