Can you use retirement savings as collateral

Question

Hi, I'm currently an active duty military member and I have saved up 14k on my tsp. I want to start my real estate journey towards financial freedom by buying multi-family and house hacking. I am aware that I can get a va loan with 0% down but I want to possibly get an FHA and use my retirement savings as either collateral or just withdraw the money suffering a penalty but having it on hand. What financing options do I have as someone with a fair credit score and no on hand money saved up. I live in Pierce County, WA

Thanks and I appreciate any and all the feedback

Benjamin Hewitt · Answer

@Jaziel MaldonadoRoman You can actually take out a loan from your TSP for a primary residence without penalty, and you can repay it over a period up to 15 YEARS. The TSP website explains the various ways in which you can access the money you have in there. Check it out here: TSP Loan Types

Let me know if you want to talk in more detail about how to leverage and plan your finances. While I'm new to the real estate strategy, I am a registered Financial Advisor who specializes in military clients (and I'm military myself).

Zack Karp · Answer

@Jaziel MaldonadoRoman using FHA first is actually a smart move strategically.  Check with your TSP administrator to see if you can withdraw the funds (even with penalty), and then deposit some or all of the funds back within 60 days to avoid the penalty.  That would be the best move.  To your question, if you don't withdraw the funds, then it can be used to satisfy your reserves, if required, but cannot be used for down payment unless liquidated.

Then save VA and Conventional for future properties, there is a very strategic reasoning for the order in which you use your financing, as far as qualifying/guidelines.

TYFYS and best of luck!

Jake DeAtley · Answer

hi @Jaziel MaldonadoRoman What is your reasoning in going FHA over VA? Generally FHA is going to have mortgage insurance which you wouldn't have with VA and that can be a reasonable ammount per month!

Can you use retirement savings as collateral

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