{"id":186619,"date":"2026-01-26T13:07:32","date_gmt":"2026-01-26T20:07:32","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=186619"},"modified":"2026-01-26T13:07:36","modified_gmt":"2026-01-26T20:07:36","slug":"white-house-walks-back-401k-housing-down-payment-plan","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/white-house-walks-back-401k-housing-down-payment-plan","title":{"rendered":"Amid a Flurry of Potential Policy Changes Around Real Estate\u2014The White House Has Walked Back Its 401(k) Downpayment Proposal"},"content":{"rendered":"\n

President Donald Trump has been accused of many things recently. Being short of ideas\u2014whether good or bad\u2014is not one of them.<\/span><\/p>\n\n\n\n

However, after touting<\/span> 50-year mortgages<\/span><\/a>, <\/span>proposing to stop large institutional investors from buying single-family homes<\/span><\/a>, and urging Freddie Mac and Fannie Mae to<\/span> buy mortgage-backed securities<\/span><\/a> to lower interest rates, it turns out that his latest housing affordability fix\u2014allowing buyers to tap their 401(k) plans for a down payment on a personal home\u2014wasn\u2019t actually his idea. It was an advisor\u2019s. And what\u2019s more, the president decided he\u2019s not on board.<\/span><\/p>\n\n\n\n

“I’m not a huge fan. Other people like it…One of the reasons I don’t like it is their 401(k)s are doing so well,\u201d<\/span> he told reporters<\/span><\/a> Thursday on Air Force One on his way back to Washington, D.C., from the World Economic Forum in Davos, Switzerland. \u201cThe housing market is good, but the 401(k)s are doing much better than the housing market.\u201d<\/span><\/p>\n\n\n\n

Clearly, someone spoke out of turn: Kevin Hassett, director of the National Economic Council, who said on Fox Business that Trump would announce at Davos a plan to allow Americans with 401(k) plans to access funds for a down payment on a house. The idea was short on details, and after input from other advisors, Trump was quick to throw Hassett under the bus.<\/span><\/p>\n\n\n\n

The Argument for Stocks Alongside Real Estate Investments<\/span><\/h2>\n\n\n\n

The main reasons were likely the tax implications of withdrawing money from a 401(k), and the fact that a workaround already exists: 401(k) plans allow employees to borrow against their accounts, repay the loan, and avoid tax liabilities. Additionally, certain types of IRAs allow holders to take out<\/span> $10,000 penalty-free<\/span><\/a> for a first-time home purchase.  <\/span><\/p>\n\n\n\n

While many real estate investors eschew traditional investing due to stock market volatility and the lack of control that comes with owning shares, there\u2019s no doubt that certain tech stocks \u2014<\/span>Nvidia, Broadcom, and Taiwan Semiconductor Manufacturing<\/span><\/a> come to mind\u2014have blown real estate out of the water with their returns in recent years. Therefore, <\/span>diversification<\/span><\/a> is the safe play: building up a 401(k) from a W-2 job while investing in real estate.<\/span><\/p>\n\n\n\n

That\u2019s why Sergio Altomare, CEO of real estate private equity and development firm Hearthfire Holdings, told <\/span>Nexstar\u2019s NewsNation<\/span><\/a> that the proposed 401(k) down payment idea came with a downside. \u201cWhat are the ramifications of hitting your 401(k) early? Maybe adding some limits to it, so people don\u2019t deplete it to buy their dream home too soon,\u201d he added.<\/span><\/p>\n\n\n\n

How Small Landlords Can Build Their Portfolios Without Gutting Retirement Savings<\/span><\/h2>\n\n\n\n

1031 exchanges<\/span><\/h3>\n\n\n\n

Assuming you want to invest in real estate without going into your 401(k), there are workarounds, particularly if you already own a home. <\/span>Bloomberg<\/span><\/a> notes that financial advisors suggest drawing on taxable brokerage accounts or using 401(k) loan provisions. <\/span><\/p>\n\n\n\n

However, if you already own properties,<\/span> 1031 exchanges<\/span><\/a> are the gift that keeps on giving, offering a tax deferral mechanism to roll one property into another. In the process, you increase your net worth and <\/span>cash flow<\/span><\/a>.<\/span><\/p>\n\n\n\n

Low-cost capital<\/span><\/h3>\n\n\n\n

Down payment assistance has become a \u201cgrowing tool\u201d for first-time homebuyers during the affordability crisis, extending to one-to-four-family homes, thus allowing <\/span>house hacking<\/span><\/a> to offset mortgage payments and possibly turn a profit, the <\/span>New York Times<\/span><\/a><\/em> reports<\/span><\/a>.<\/span><\/p>\n\n\n\n

State Housing Finance Agency (HFA) First-Mortgage Programs<\/span><\/h3>\n\n\n\n

These programs, such as the State of New York Mortgage Agency (SONYMA)\u2019s<\/span> Achieving The Dream<\/span><\/a>, are funded by governments, nonprofits, and private real estate firms, layering grants or forgivable loans on top of primary mortgages. They allow low interest rates and down payment assistance.<\/span><\/p>\n\n\n\n

Such programs <\/span>are offered<\/span> through<\/span> State Housing Finance Agency (HFA)<\/span><\/a> first mortgage programs, available in 30 states and for owner-occupied one-to-four-unit homes.<\/span><\/p>\n\n\n\n

State and local down-payment and closing-cost assistance programs<\/span><\/h3>\n\n\n\n

Here is <\/span>a state-by-state guide<\/span><\/a> to down payment assistance (DPA) programs, cataloging grants, forgivable loans, and low-interest second mortgages across the U.S., many of which can <\/span>be used<\/span> on a one-to-four-family home. The Mortgage Reports is an invaluable resource.<\/span><\/p>\n\n\n\n

Additionally,<\/span> Down Payment Resource\u2019s Homeownership Program Index<\/span><\/a> tracks more than 2,600 homebuyer assistance programs nationwide <\/span>and provides<\/span> a searchable, state-level list, including city and county offerings, for 30-year fixed-rate first mortgages.<\/span><\/p>\n\n\n\n

HUD\u2019s homebuyer program hub<\/span><\/a> links to each state\u2019s homeowner and assistance programs, many of which <\/span>are designed<\/span> for one-to four-family existing and new properties.<\/span><\/p>\n\n\n\n

Bankrate<\/span><\/a> and Rocket Mortgage also maintain updated guides to down payment assistance, cataloging grants, deferred payment second mortgages, and below-market first mortgage programs that can be layered on FHA, VA, USDA, and conventional loans for one-to-four-unit homes, where allowed.<\/span><\/p>\n\n\n\n

Homebuyer.com<\/span><\/a> is another good resource for programs that reduce upfront costs for one- to four-unit owner-occupied homes.<\/span><\/p>\n\n\n\n

Creative refinancing<\/span><\/h3>\n\n\n\n

For current homeowners and investors, the modest decline in interest rates has created wiggle room for creative <\/span>refinancing<\/span><\/a> to reposition funds and take advantage of lower rates. <\/span><\/p>\n\n\n\n

Here are a few strategies you can employ to make the most of what you\u2019ve got for investment purposes:<\/span><\/p>\n\n\n\n