One of President Donald Trump’s top economic advisers on Friday unveiled a plan that would enable Americans to use their 401(k) funds to make a down payment on a home.
National Economic Council Director Kevin Hassett told Fox Business that Trump will include it in his plans for housing affordability.
“The typical monthly payment about doubled for an ordinary family buying an ordinary home. And the down payment they needed to buy a home went from about $15,000, to about $32,000. And so there’s a real lot of room to make up,” Hassett told Fox Business’ Maria Bartiromo.
“We’ve got a whole bunch of policies that are going to help people do that,” he said. “The one you didn’t mention that we’re also talking about, and the president will put the final plan out in Davos next week, I’ll be flying up there with him, is that we’re going to allow people to take money out of their 401(k)s and use that for a down payment.”
Hassett also discussed Trump’s renewed proposal to direct Fannie Mae and Freddie Mac to buy $200 billion in mortgage-backed securities, something he said would help drive down interest rates.
When asked whether he had concerns about tapping 401(k)s and hurting savers later in retirement, Hassett downplayed those concerns.
“What you have to do is come up with a way, so, a simple way. We’re still talking about the mechanics of it, but suppose that you put 10% down on a home, and then you take 10% of the equity of the home, and put it in as an asset in your 401(k), then your 401(k) will grow over time,” he said.
“As the value of your house grows, you’ll be healthy, have more money for retirement,” Hassett said, “and you’ll have solved the liquidity constraint problem and got yourself a house early in life.”
Americans, typically, are prohibited from withdrawing funds from a 401(k) for a first-time home purchase without paying a penalty.
On Jan. 8, Trump announced on social media that he was instructing Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds. He said that doing so would drive rates and monthly mortgage payments down.
At the time, Trump said he was issuing the order because the two GSEs are flush with cash. FHFA Director Bill Pulte posted on X later that “We are on it. Thanks to President Trump, Fannie and Freddie will be executing.”
The Davos Economic Forum is the annual meeting of the World Economic Forum (WEF)in Davos-Klosters, Switzerland. The forum, which will run Monday through Jan. 23, brings together global leaders from business, government, and civil society to talk about major world issues such as geopolitics, technology, climate change, and economic challenges.
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