Can I borrow on margin in my brokerage account to come up with 20% house downpayment?

Question:

I don't want to sell the stock in my portfolio to come up with cash for 20% downpayment for buying a house. If I can take cash out of brokerage account on margin (collaterized by the stock), will lenders allow me to use that cash towards the 20% down payment?

Answer:
You should be able to do this. Technically, this is a zero debt, zero credit report impact. The bank will ask you where the money came from. In the end, if you have asset coverage, they should not care provided you have solid credit and income coverage. I just did a refinance on one of my rentals with a bank and they did not even verify income. In fact, they did a drive by appraisal and took my number on the value. Talk to your banker first. Be honest and do not pull the trigger unless you have the bank on the hook for the loan.

All the best,
Gromac

Borrow on MARGIN? I do not think any lender will consider it, but I'd be interested to hear what a real lender says (if we can find one here.)

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Can I borrow on margin in my brokerage account to come up with 20% house downpayment?

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