Yes, you can use a stock portfolio to buy a house, and you have two basic routes: sell shares and bring the cash to closing, or pledge the portfolio as collateral and borrow against it without selling. Which one costs less depends on your holding periods, your tax bracket, and how much of the portfolio you want to keep invested.
Selling Shares and Using the Cash
The direct path is to sell positions and apply the proceeds to a down payment or the full purchase price. Under the SEC’s T+1 settlement framework, cash from a stock sale is generally withdrawable one business day after the trade executes.1SEC.gov. Shortening the Securities Transaction Settlement Cycle Some international holdings and thinly traded securities still settle on T+2, so confirm with your brokerage before counting on next-day availability.
The mistake to avoid is treating the sale price as your usable cash. Sell $200,000 of stock with a $120,000 cost basis and you owe tax on the $80,000 gain. Depending on holding period and bracket, that bill can shave $12,000 to $30,000 or more off what you actually get to spend. Run the tax math before you commit to a purchase price.
What Selling Will Cost You in Taxes
Holding period controls the rate. Shares sold within a year of purchase produce short-term capital gains, taxed at ordinary income rates that for 2026 run from 10% to 37%.2Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Shares held longer than a year qualify for long-term capital gains rates of 0%, 15%, or 20%, depending on filing status and income.3Office of the Law Revision Counsel. 26 USC 1222 – Other Terms Relating to Capital Gains and Losses
For 2026, a single filer pays 0% on long-term gains with taxable income below $49,450, and the 20% rate starts above $545,500. Married couples filing jointly reach the 20% rate above $613,700. Most buyers with meaningful portfolios land in the 15% band, but one large sale can push you into the next tier for that year.
The 3.8% Surtax for Higher Earners
A net investment income tax of 3.8% applies on top of capital gains when modified adjusted gross income exceeds $200,000 for single filers or $250,000 for married couples filing jointly.4Office of the Law Revision Counsel. 26 USC 1411 – Imposition of Tax Those thresholds are not indexed for inflation. A large sale to fund a house can push total income across the line and bring the top combined federal rate on long-term gains to 23.8%.
If You Plan to Rebuy What You Sold
If part of your sale is at a loss and you intend to harvest it, the wash sale rule disallows the loss when you buy the same or a substantially identical security within 30 days before or after the sale.5Office of the Law Revision Counsel. 26 USC 1091 – Loss From Wash Sales of Stock or Securities The window runs in both directions. If you plan to rebuild the same positions after closing, wait at least 31 days.
Borrowing Against the Portfolio Instead
If selling would trigger a painful tax bill or interrupt a long-term strategy, you can pledge the portfolio as collateral for a loan. The lender places a lien on the brokerage account instead of forcing a sale. The stocks stay invested, you keep collecting dividends, and no capital gain is realized.
Borrowing capacity depends on what you hold. A securities-backed arrangement typically allows borrowing 50% to 95% of the pledged account value, with advance rates set by asset type.6FINRA.org. Securities-Backed Lines of Credit Explained Individual stocks and equity mutual funds generally support 50% to 70%, so a $500,000 equity portfolio might secure $250,000 to $350,000. U.S. Treasuries sit at the top of the range at 90% to 95%, with investment-grade corporate bonds in between.
The Maintenance Call Risk
Pledged collateral moves with the market. If prices fall and your account drops below the lender’s required threshold, you’ll get a maintenance call demanding additional cash or securities within two to three days. Miss it and the lender can liquidate your positions without your approval to cover the shortfall.7Investor.gov. Investor Alert – Securities-Backed Lines of Credit That forced sale happens at the prevailing market price, during the kind of downturn when you’d least want to sell, and it also realizes the capital gains you were trying to defer.
In calm markets this looks like inexpensive money. In a correction it can force a sale at the worst moment and leave you owing tax on gains you never chose to take. Concentrated portfolios carry significantly more call risk than broadly diversified ones.
Retirement Account Stocks Follow Different Rules
Holdings inside a 401(k) or IRA are not interchangeable with a taxable brokerage account, and treating them that way is expensive.
Traditional IRA owners get a narrow first-time homebuyer exception: up to $35,000 can be withdrawn over a lifetime without the 10% early distribution penalty when the funds go toward buying, building, or rebuilding a first home.8Internal Revenue Service. Notice 2024-02 – Miscellaneous Changes Under the SECURE 2.0 Act of 2022 The cap was $10,000 for decades before the SECURE 2.0 Act raised it. The waiver covers IRAs, SEP-IRAs, and SIMPLE IRAs, but not 401(k) or other employer-sponsored plans.9Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions Ordinary income tax on the withdrawal still applies; only the 10% penalty goes away.
With a 401(k), the first-home exception doesn’t exist. Your options are a 401(k) loan, usually capped at the lesser of 50% of the vested balance or $50,000, or a hardship withdrawal that owes both income tax and the 10% penalty. If most of your equities sit in retirement accounts, your real cost to access them is meaningfully higher than if the same shares were in a taxable account.
Lenders will count retirement balances toward reserves, but Fannie Mae requires the account to be vested and accessible to the borrower regardless of current employment.10Fannie Mae. Retirement Accounts
What the Lender Will Want to See
Underwriters don’t take your word for the balance. Expect to produce the most recent 60 to 90 days of official brokerage statements showing your name, the firm, and the market value of each position. The statements prove the assets are seasoned, meaning they’ve sat in the account long enough to confirm they’re yours and not a recent loan.
When stock assets are earmarked for the down payment or closing costs, Fannie Mae guidelines require that the portfolio’s value exceed the needed amount by at least 20% to cushion against market moves between verification and closing.11Fannie Mae. Stocks, Stock Options, Bonds, and Mutual Funds If you can’t clear that margin, the lender will likely require you to sell the shares and document the cash in a bank account before closing.
Restricted stock units need a vesting schedule. Only vested, transferable shares count toward qualification; unvested RSUs are treated as future compensation. Official PDF statements downloaded from the brokerage are strongly preferred over screenshots, and cost basis matters because it lets the lender estimate what you’d actually net after taxes if you had to sell.
If the Account Is Overseas
Stocks held in a foreign brokerage come with extra steps. Fannie Mae requires foreign-language documents to be provided in English or with complete, accurate translations, and the funds must be converted to U.S. dollars and deposited into a U.S.-regulated institution before closing, with a documented paper trail of the exchange.12Fannie Mae. Foreign Assets The conversion and international transfer can take a week or more. Start early.
Getting the Money to Closing
After the sale settles, you’ll wire proceeds from the brokerage to the escrow or title company. Domestic outgoing wire fees typically run $15 to $25, with some brokerages waiving them above certain balance thresholds.13Charles Schwab. Charles Schwab Pricing Guide for Individual Investors Wires generally have to be initiated before the brokerage’s mid-day cutoff to arrive the same business day. Verify the escrow company’s routing and account numbers directly before sending anything, because misdirected wires are slow and hard to recover.
From sale to wire confirmation can run as little as two to three business days with careful planning, but building in a week of cushion is prudent. Closings get delayed over hold periods and missed wire cutoffs more often than the industry cares to say.