Your 401(k) and buying a home
A 401(k) is built for retirement, but two things matter for home buyers: the employer match is free money, and borrowing against it is risky. Here's how the match adds up.
First, grab the free money
A 401(k) is built for retirement, but it matters for home buyers because of the employer match. If your employer matches part of what you contribute, that's an instant return you won't find anywhere else — always worth capturing before you funnel money into other savings.
What the match is worth
Say you contribute $6,000 a year, your employer adds a 50% match ($3,000), and it grows about 6% a year. The gold portion is money you never earned — it's pure match:
- Your contributions
- Employer match (free)
- Growth
In three years your $18,000 is matched by $9,000 of free money — a head start no savings account can match.
Borrowing for a home: a last resort
Some plans let you take a loanagainst your 401(k) for a home, or withdraw early. Both are risky: you're pulling money out of retirement, missing the growth it would have earned, and an unpaid loan can trigger taxes and penalties. Treat it as a genuine last resort — for a down payment, a Roth IRA or plain high-yield savings is usually the better source.
See the full set of US accounts, then run your numbers on the mortgage calculator.
This page is general educational information to help you think it through — not financial, tax, or legal advice. Your own situation is unique; consider speaking with a qualified adviser before making a big decision. See how we calculate and our Privacy Policy.