Assets & Cash to Close
Using Retirement or Investment Funds for a Down Payment
How lenders treat 401(k) loans, IRA withdrawals, brokerage accounts and crypto when you use them for a down payment or reserves.
Updated 2026-08-21| Applies to: Buyers funding a purchase from retirement or investment accounts.
The short answer
Retirement and brokerage funds can be used for a down payment when the account is documented, the withdrawal or loan is traced into your bank account, and any repayment obligation is considered. A 401(k) loan usually adds a monthly payment to your file; a withdrawal does not, but it can carry tax consequences.
Lenders do not care where your money grew. They care that it is yours, that it arrived legitimately, and that using it does not create a hidden obligation.
How each source is treated
| Source | Documentation and effect |
|---|---|
| 401(k) loan | Terms and proof of receipt; the repayment may count as a monthly debt under some programs |
| 401(k) or IRA withdrawal | Statements plus proof of the transfer; consider taxes and penalties with your tax advisor |
| Brokerage stocks or funds | Statements plus proof of liquidation and transfer; a portion of value may count toward reserves without selling |
| Cryptocurrency | Generally must be converted to dollars in a US account with a documented trail; treatment varies by lender |
| Business funds | May be allowed for self employed borrowers with additional documentation of business impact |
The trail is the whole job
- 1.Statement showing the account and the balance before the transaction
- 2.Evidence of the withdrawal, loan or sale
- 3.The deposit landing in your bank account
- 4.A short explanation tying the two together
Tax consequences of retirement withdrawals are a question for a CPA or tax advisor, not a lender.
Frequently Asked Questions
People also ask
Can gift funds cover 100% of my down payment?
On some programs, yes, particularly FHA and certain conventional programs depending on loan-to-value and occupancy, but rules vary, so confirm specifics with your loan officer for your exact scenario.
Read: Using Gift Funds for Your Down PaymentHow large is a large deposit?
Thresholds vary by program and lender, and many use a percentage of the purchase price or compare the deposit against your monthly income. Anything unusual for your pattern can be questioned.
Read: Large Deposits and Sourcing Your Down PaymentDo first time buyers need reserves?
Often not on standard primary residence programs, though stronger reserves can help a borderline file.
Read: Mortgage Reserves: What They Are and When You Need ThemDoes earnest money count toward the down payment?
Yes, it is credited toward your funds due at closing.
Read: Cash to Close vs Down Payment: Why They Are DifferentTerms used in this guide
- Assets
- Funds and accounts a lender reviews to confirm you can cover the down payment, closing costs and any required reserves.
- Reserves
- Verified funds left after closing, usually measured in months of the housing payment. Requirements are higher for investment properties and some jumbo loans.
- Cash to Close
- The total funds you must bring to closing: down payment plus closing costs and prepaids, minus credits and your earnest money deposit.
- Debt to Income Ratio
- Your monthly debt payments divided by your gross monthly income, expressed as a percentage. Lenders use it to judge whether a new mortgage payment fits your budget.
Written by
Manny Oloyede, Mortgage Broker
NMLS #1824463 | Ultimate Mortgage Brokers LLC NMLS #2619461 | Licensed in OH | KY | NC | PA | SC | TN | TX
I have worked in mortgage lending since 2018 out of the Akron / Cuyahoga Falls Branch, helping buyers, homeowners and investors across Northeast Ohio and every state where I am licensed. These guides reflect the questions I answer most often, written the way I would explain them on a call.
Keep reading
Mortgage Reserves: What They Are and When You Need Them
What counts as reserves, how lenders measure them in months of payments, and which loan types require them most often.
Assets & Cash to CloseLarge Deposits and Sourcing Your Down Payment
Why lenders ask about deposits in your bank statements, which ones need documentation, and how to keep your funds easy to verify.
Buying a HomeUsing Gift Funds for Your Down Payment
Which loan programs allow gift funds for a down payment, who can give them, and how gift letters, sourcing, and wiring documentation work.
Assets & Cash to CloseCash to Close vs Down Payment: Why They Are Different
Your down payment is only part of the money due at closing. Here is what makes up cash to close and why the number moves.
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