Trump Rejects 401(k) Home Down Payment Plan, Says Rising Accounts Are Enough

President Donald Trump on Thursday said he does not support a proposal from one of his top economic advisers to let Americans use retirement savings from their 401(k) plans to make home down payments.

“I’m not a huge fan. Other people like it,” Trump told reporters as he returned to Washington from the World Economic Forum in Davos. “And one of the reasons I don’t like it is that their 401(k)s are doing so well.”

The idea had been floated last week by White House economic adviser Kevin Hassett, who told Fox Business the administration was working on a plan to allow 401(k) withdrawals for down payments. “We’re going to allow people to take money out of their 401(k)s and use that for down payment,” Hassett said. “We’re still talking about the mechanics of it.”

Hassett framed the proposal as one way to help first time buyers afford a home. The plan would aim to let workers tap retirement accounts without the usual penalties, then find a way to replace or protect those funds later, he said in a television interview.

Trump did not present that idea during his Davos speech. Instead he highlighted an executive order he signed last week aimed at keeping big institutional investors out of the single family home market, a move the White House says will protect buyers from Wall Street competition.

The shift illustrates a split inside the administration over how to tackle housing affordability. One adviser offered a financial workaround. The president seemed more interested in stopping large firms from buying homes and in other steps he says will lower mortgage costs.

Housing market data show why the issue is politically sensitive. The Federal Housing Finance Agency reported that U.S. house prices rose 1.7% from October 2024 to October 2025, a modest gain that still leaves many buyers priced out.

Other measures point to soft demand. Redfin and the National Association of Realtors reported drops in pending home sales in December, with Redfin noting a roughly 6% fall and the National Association of Realtors reporting a larger month to month decline. Those drops reflect limited listings and buyer hesitation.

Critics of using 401(k) money for down payments say the plan could create new risks. They warn that tapping retirement accounts could leave some households with smaller nest eggs if home values stall or markets turn down. Supporters say rules could be written to protect workers and avoid penalties.

Economists also point to a more basic problem. Many experts say the root cause of high housing costs is a long standing shortage of homes and slow building, not a lack of buyer cash. Giving people more money to bid for the same limited supply may push prices up instead of making homes easier to buy.

For now the 401(k) idea appears to be on hold. The White House is pressing other actions, and the president has signaled he prefers keeping retirement savings intact when those accounts are rising in value.

Featured image via X screengrab