'Do not do this': Trump official shocks with wild new plan to buy a home

The Trump administration stunned observers as it cooks up an eyebrow-raising new scheme to tackle America's housing crisis, which calls for dipping into retirement savings.

White House economic adviser Kevin Hassett made the announcement Friday on Fox Business, Reuters reported.

"We're going to allow people to take money out of their 401(k)s and use that for down payment," he said in an interview.

President Donald Trump "will put the final plan out in Davos next week," he said, referring to the World Economic Forum in Davos.

Even so, Hassett acknowledged the proposal still needs work.

"We're still talking about the mechanics of it," Hassett said on "Mornings with Maria." The administration is reportedly trying to find a "simple" way to allow the fund transfers without gutting people's retirement nest eggs.

The announcement marks Trump's latest attempt to address soaring housing costs as he faces economic headwinds and the 2026 midterm elections. The president has already proposed banning institutional investors from purchasing single-family homes and directing federal agencies to buy $200 billion in mortgage bonds to lower interest rates.

The housing market remains frozen, with high mortgage rates and inflated prices keeping potential homebuyers on the sidelines. Recent inflation data shows housing costs remain stubbornly elevated despite administration efforts.

But critics warn the real problem isn't access to down payment cash, it's a severe shortage of available homes. Without more housing supply, loosening down payment rules could simply drive prices even higher.

Many observers warned Americans against doing such a move. And some said it'll backfire on Americans.

Jason Russell, managing editor at Reason, wrote on X, "I'm guessing this would be politically popular, but the effects would be: 1. higher home prices and interest rates for people buying their first home (especially for people who don't have 401(k) savings or would rather, wisely, keep them for retirement) 2. higher home prices and interest rates for people trying to move up out of starter homes (...me) 3. w/ higher values on their homes, higher property taxes on seniors who want to stay in their homes forever basically the only people who benefit are people who sell their home and then don't buy a new one (seniors moving into assisted living?) but for everyone else it sucks! BUILD MORE HOUSING."

Trader Gary Haubold warned on X, "This doesn't seem like a good idea - 401(k) withdrawals to buy a house."

Freelance journalist Ellen Chang wrote on X, "I don't like to give personal finance advice, but do not do this. Your 401(k) and IRA accounts are meant for you to use when you stop working. Do not take money out unless it is a true emergency."

Ed Carson, news editor at Investor's Business Daily, wrote on X, "Another demand-subsidizing effort vs. actually boosting supply. But this plan would help 40-50-year-olds move up at the expense of entry-level 30-year-olds who have little or no 401(k) balances. This would presumably require legislation, FWIW."

Trader Jim Iuorio lamented on X, "You don’t fix supply side problems with demand side solutions…"