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Guru_Guy, Lawyer
Category: Finance
Satisfied Customers: 2418
Experience:  30 years experience in stocks, bonds, tax deferred accounts, trusts, & tax issues.
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can a bank use your 401k as collateral for a mortgage

Customer Question

If I have no credit or collateral can a 401k be used as collateral to qualify for a mortgage
Submitted: 10 years ago.
Category: Finance
Expert:  Guru_Guy replied 10 years ago.
A mortgage is a loan for a house. In such case, the house and property is the collateral for the mortgage. Additional collateral is not a part of the arrangement.

You have the ability to take out a loan against your 401(k) and use that cash to increase the down payment on a home and reduce the amount you are borrowing for the mortgage. But any lender that wants additional collateral for a mortgage is either dishonest or has no idea what he is talking about. If someone is suggesting that, I suggest you seek a mortgage elsewhere.

I hope this helps!