Miramar & Pembroke Pines Buyers: Should You Tap Your 401(k) for a Down Payment? 3 Risks You Must Know | EZ Funding Group, Inc.

Is Borrowing from Your 401(k) a Smart Way to Buy a Home in Florida?

Thinking about borrowing from your 401(k) or using a Security-Backed Line of Credit (SBLOC) to buy a home in Florida? Here are 3 critical risks you need to understand before you move forward, plus safer alternatives that buyers in Jacksonville, Orlando, Tampa, and Miami are using right now. Learn more aboutFlorida home loan options here.

3 Critical Risks

⚠️ Risk #1: Job Loss Triggers Immediate Repayment + Tax Penalties

If you lose your job within 60–90 days of taking a 401(k) loan, the full balance becomes due immediately. Can't repay? The IRS treats it as an early withdrawal, meaning income taxes plus a 10% penalty if you're under 59½. One of our clients borrowed $30,000 from their 401(k) to buy in Tampa. Eight months later, they were laid off, faced a $3,000 penalty plus thousands in taxes.

⚠️ Risk #2: Opportunity Cost = Tens of Thousands Lost

Money borrowed from your 401(k) stops compounding. Over 20–30 years, that can mean losing $50,000+ in retirement savings, even if you repay the loan on time.

⚠️ Risk #3: Market Volatility Can Force Asset Sales (SBLOC)

With an SBLOC, if your portfolio drops, your lender may issue a margin call requiring immediate cash deposits or forcing them to sell your investments at a loss. If you're buying a rental property in Orlando or Jacksonville, a market correction could wipe out years of gains overnight.

3 Safer Alternatives

✅ FHA Loan: Just 3.5% Down and great for first-time buyers

Widely available across Hillsborough, Orange, Duval, and Miami-Dade counties. Perfect for first-time buyers and those with limited savings. Learn more aboutFlorida FHA loan options.

✅ VA Loans: 0% Down for veterans and active-duty service members

Eligible service members can buy in Tampa, Jacksonville, or Orlando with zero down payment and competitive rates. Read our guide onVA loans in Florida.

✅ Gift Funds + Local Assistance Programs

Parents or relatives can contribute with proper documentation. Discoverhow gift funds work for Florida buyers. Plus, programs like Florida Hometown Heroes and county purchase assistance programs offer down payment and closing cost help.

✅ Non-QM Loans for Unique Situations

Self-employed or have complex income? Non-QM loans offer flexible underwriting that can help you buy without tapping retirement accounts. ExploreNon-QM loan options in Florida.

At EZ Funding Group, Inc., we regularly help buyers in Jacksonville, Orlando, Tampa, and Miami secure homes with 3%–3.5% down and zero retirement account risk. With over 20 years of experience helping Florida families finance homes, we've seen how the right mortgage plan protects both your future and your peace of mind.

The Bottom Line

Tapping your 401(k) or using an SBLOC can get you into a home faster, but it comes with serious risks that could derail your financial future. Job loss, market downturns, and repayment pressure are real scenarios that have cost Florida buyers thousands.

Our advice? Exhaust safer, lower-risk options first. And if you do choose to borrow from retirement or investments, go in with your eyes wide open, a rock-solid backup plan, and the guidance of a trusted financial advisor.

Your home should be your biggest investment and not your biggest risk.

Ready to explore your best path forward?Start your pre-approval orschedule a quick 15-minute call to discuss what makes sense for your situation in Jacksonville, Orlando, Tampa, Miami, or anywhere across Florida.

FAQ

Can I use my 401(k) for a down payment without penalties?

Yes, but only if you repay the loan on time and remain employed. If you lose your job within 60–90 days, the balance becomes due immediately, and unpaid amounts are treated as early withdrawals subject to income tax and a 10% penalty if you're under 59½.

What's safer — a 401(k) loan or FHA 3.5% down?

FHA loans with 3.5% down are generally safer because they don't put your retirement savings at risk. You also avoid the risk of penalties, tax consequences, and lost compound growth. At EZ Funding Group, we help most buyers secure FHA or conventional loans without touching their 401(k).

EZ Funding Group, Inc. NMLS #349022 | Jaime Charouf NMLS #348964 | Equal Housing Lender

Serving Jacksonville, Orlando, Tampa, Miami, and all of Florida: EZ Funding Group, Inc. helps first-time buyers and homeowners find smarter mortgage solutions.