Retirement Funds, 401K, & IRA Accounts: Their Use in Real Estate Purchases

Real Estate Agent with Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales 3090099

For those with some retirement funds, real estate  may be an option you haven't considered:




Retirement Funds, 401K, & IRA Accounts:

Their Use in Real Estate Purchases


There are several ways buyers can "fund" their home or investment property purchase beyond those funds they've built up via their savings accounts ...


As a potential home buyer, it's always important to discover and thoroughly investigate all options at your disposal.  Finding and working with a good loan officer makes a big difference in this regard.  


An experienced knowledgeable LO will do their homework and then present you with a menu of available options. Then they'll help you weigh the pros and cons of each as they pertain to you and your future plans.  


Now it's important to first point out: 

"Low or NO Down Payment" mortgage programs exist.  And they certainly can help ease the need for large savings and down payments.



Some examples of those helpful mortgage programs are:

  • VA Loans
  • FHA Loans
  • Home Ready Program (Fannie Mae)
  • Home Possible/Home One Programs (Freddie Mac)
  • USDA Loans
  • IHDA * (100% Financing. Income Limits Apply. Funding is limited. Restrictions are also in place and apply. * Illinois Housing Development Authority.  Can be used for the purchase of IL properties only.) 


And it's also important to add:  Beyond those mortgage programs mentioned above, help can be available to buyers/borrowers via the following methods.

But I'm going to focus in this post on 401k and IRA (Individual Retirement Accounts), where an account holder has "access" to their retirement funds before their retirements take place ... 


There are several ways that an employee with a 401K or IRA  can get to their funds if they're a hopeful buyer.  Those range from a loan against the balance of the account ... to an outright withdrawal of money. 


No matter the method of access:  It's vitally important that each account holder/borrower know or learn the specifics of their own retirement plans/funds.  Each 401k or IRA plan can have different rules for loans and withdrawals.  I highly recommend, if you are considering either action, that you speak with your plan's administrator prior to moving forward. 


Of special note, if you're buying a first home:  In these instances, there are often specific provisions attached for that purpose.  Many plans allow an individual to withdraw funds without penalties for their home purchase.  It's wise to check with your administrator to see if that beneficial option exists for your first home purchase.


Also, know that:  One's longevity with their employer may dictate if funds are available to be borrowed or withdrawn. 


If a provision of this nature exists, it's referred to as the "Vesting Period".  It speaks to the number of years an employee is required to be in the company's retirement plan prior to being eligible to withdraw or obtain a loan on retirement funds.


Included in most (not all) cases:  An employee can typically borrow up to 50% of the TOTAL Balance of their account.  The funds can then be repaid* back into the same account via a payroll deduction made over a set period of time, usually 5 years.  *That "re-payment" of funds is NOT considered a monthly debt in most loan scenarios, note all the qualifiers for these actions. 


As you can tell from my paragraph above, rules, regulations, and asterisks abound regarding 401K and IRA loans and withdrawals.  And again, that is why I so strongly urge all my borrowers to have a conversation with their plan's administrator prior to making any decision to tap their funds. 


All financial options should be presented, considered, and weighed by a borrower when hoping to buy.  But when retirement funds are being considered for use in a home purchase/financing, it's especially important that a careful review of account guidelines and rules be conducted and thoroughly understood.


For those considering the use of retirement funds for an investment property purchase, there may be special rules for them at play within their retirement plans.  Those I see most often are:


  • Age of the Account Holder
  • Rate of Returns
  • Rules for accessing funds
  • Special "terms" for gaining access (Loan or Withdrawal) to down payment funds by those purchasing an Investment Property

The use of retirement funds can be a very reliable and acceptable resource for funding a real estate purchase, for home or investment property.  But please ... protect yourself and your financial future. 


Take the time to fully-educate yourself prior to taking any action.  Consult your plan's administrator and your New Lenox - Will County - Chicagoland/IL - WI loan officer for information and advice along the way ...  



* Looking for mortgage financing answers, options, solutions, and experienced assistance? 

Are you hoping to Buy, Refinance or purchase an Investment Property in New LenoxWill County, or elsewhere in the Chicagoland - IL - WI area? 

Contact me!  I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
I'm easily found at:
Gene Mundt
Mortgage Originator -NMLS #216987 - IL Lic. 031.0006220 - WI Licensed
American Portfolio Mortgage Corp.
NMLS #175656
Direct: 815.524.2280
Cell/Text: 708.921.6331
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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656


Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 


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Comments (8)

Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

These are very much some of the most important things to think about when it comes to retirement in real estate investment as well. Roth IRAs and such are nothing to sneeze at.

Feb 08, 2019 10:46 PM
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thank you for reblogging the post. I hope others will read it too and learn 

Feb 09, 2019 02:49 AM
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Real Estate Agents - Luxury - Divorce

This is very often a source of down payment after divorce.

Feb 09, 2019 03:07 AM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good morning Gabe - I had plenty of experience in this area being cheif HR officer and trustee for the 401(k) plan.

Feb 09, 2019 04:33 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Gabe, I have a friend with a buyer closing soon, and with his IRA account.  Great post to reblog!

Feb 09, 2019 06:23 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Thank you very much, Gabe, for sharing this excellent reblog selection.

Feb 09, 2019 07:11 AM
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thank you for stopping by and taking the time to read my re-blog.

Mar 04, 2019 06:19 AM
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thanks for stopping by. Your comments are always appreciated!

Mar 04, 2019 06:20 AM