The proposal aims to ease the housing affordability crisis but raises concerns about retirement security.
The Trump administration plans to allow Americans to use a portion of their 401(k) retirement savings to make down payments on homes, White House economic adviser Kevin Hassett said Friday, signaling a major shift in federal housing and retirement policy.
Speaking in an interview on Fox Business Network, Hassett said the administration is working on a proposal that would permit people to withdraw money from their retirement accounts to help buy a home, with more details expected next week.
“We’re going to allow people to take money out of their 401(k)s and use that for a down payment,” Hassett said, adding that President Donald Trump is expected to unveil the final plan at the World Economic Forum in Davos.
HASSETT: “In some places, up to 20% of the [housing] market is owned by institutions. The institutions have tax a advantage over ordinary homebuyers… it’s something that President Trump just doesn’t think is right.” pic.twitter.com/qUGWIpth9Z
— Rapid Response 47 (@RapidResponse47) January 16, 2026
White House still working out the details
Hassett said the administration is still finalizing the mechanics of the plan to ensure it does not undermine Americans’ long-term retirement security.
“We’re still talking about the mechanics of it,” he said, noting that officials are seeking a “simple” approach that would avoid damaging workers’ retirement plans.
Hassett added that he will travel with Trump to the Switzerland conference, where the proposal is expected to be formally introduced.
Housing affordability remains a major political issue
The expected policy shift comes as Trump faces continued economic pressure ahead of November’s midterm elections. Housing affordability has emerged as one of the most persistent challenges for American households, with high mortgage rates and elevated home prices sidelining many potential buyers.
Despite signs of cooling in other areas of the economy, housing costs have remained stubbornly high. Recent data from the Bureau of Labor Statistics showed that housing inflation continues to run hot, keeping pressure on renters and buyers alike.
Trump rolls out aggressive housing proposals
In recent weeks, Trump has floated a series of housing market interventions aimed at boosting affordability. These include:
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Banning institutional investors from buying single-family homes
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Directing the Federal Housing Finance Agency to purchase $200 billion in mortgage bonds issued by Fannie Mae and Freddie Mac to push down mortgage rates
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Repeatedly urging the Federal Reserve to cut interest rates
The administration hopes these moves will revive buyer demand and stimulate a housing market that has slowed amid high borrowing costs.
Economists warn of unintended consequences
While investors are watching closely for policy changes that could bring buyers back into the market, some economists caution that easing access to down payments may not solve the core problem.
Analysts argue that housing supply shortages, driven by zoning rules and construction constraints, are a bigger issue. Lower interest rates or looser financing rules could increase demand without increasing supply — potentially pushing home prices even higher.
Allowing 401(k) withdrawals for housing could also leave some Americans with smaller retirement nest eggs, raising concerns about long-term financial security.
Still, the proposal reflects growing political urgency to address the housing crisis as affordability continues to strain household budgets nationwide.
