Pure Benchmarks · Data
Should I Sell Stocks for a House Down Payment?
Updated
Short answer
It depends on when you need the money. Since 2018, an investor who held the S&P 500 for one year lost money in 16.8% of all starting days and lost more than 10% in 7.4%, with a worst one-year fall of 21.0%. Over two years the share of losing periods fell to 7.8%, and no three-year period since 2018 lost money. A down payment needed within a year or two is exposed to a fall that may not recover in time, while selling has its own cost in taxes on any gains and the growth given up.
How much gain to get back to even?
Gain needed to break even
42.9%
after a 30% loss
Time to recover
5.3 years
at 7% a year
| Loss | Gain needed to break even |
|---|---|
| -10% | +11.1% |
| -20% | +25% |
| -30% | +42.9% |
| -40% | +66.7% |
| -50% | +100% |
Buying a home is one of the few times most people need a large, fixed sum of money on a fixed date. If that money is in stocks, the question is not whether the market will rise on average, but how likely it is to be down on the day you need it. This page uses every trading day of the S&P 500 since 2018 to show how often a one, two and three-year holding period ended in a loss, and the calculator below shows how much a fall would need to recover.
Link your portfolio and every change you make is scored against the portfolio you would have kept, in dollars, so you can see which decisions helped and which cost you.
See Your Free Benchmark ReportHow often the S&P 500 lost money over a holding period
| Held for | Periods that lost money | Lost more than 10% | Worst result |
|---|---|---|---|
| 1 year | 16.8% | 7.4% | -21.0% |
| 2 years | 7.8% | 0.3% | -17.5% |
| 3 years | 0% | 0% | +9.6% |
Every starting day from January 2, 2018, measured over 252, 504 and 756 trading days, using daily S&P 500 index closes to November 2, 2026. Prices only; dividends are not included. A short, mostly rising period: longer histories include multi-year losses. Calculated by Pure Benchmarks.
The date you need the money is the risk
A down payment has a deadline. The S&P 500 fell 33.9% between February 19 and March 23, 2020, and 25.4% across 2022. Someone due to close on a house in March 2020 or October 2022 would have had a much smaller down payment than a year earlier, and no time to wait for the recovery. The closer the date, the less a long-run average helps.
Three years looked safe, but only in this window
No three-year holding period since 2018 lost money, but that reflects a mostly rising market. Over longer histories, the US market has gone well over three years below a previous high, including after 2000 and 2008. A short record is a reason for caution, not comfort.
Selling has a cost too
Selling shares held in a taxable account can create capital gains tax, at a lower rate if held for more than a year. Money moved to cash also gives up whatever the market earns in the meantime. Some buyers sell in stages as the purchase date gets closer, so they are not betting the whole down payment on a single day’s price.
Match the money to the deadline
A common approach is to keep money needed within a few years in cash, Treasury bills or a high-yield savings account, and to keep long-term money invested. The point is to decide in advance which money has a deadline, so a market fall does not decide it for you.
Measure the decision afterwards
Once you have sold, you can see what the sale cost or saved. Pure Benchmarks, our own product, compares each change in a linked account with the portfolio you would have kept and ranks the portfolio against verified investors in the same risk category.
Link your portfolio and every change you make is scored against the portfolio you would have kept, in dollars, so you can see which decisions helped and which cost you.
See Your Free Benchmark ReportFrequently asked questions
Should I sell stocks to buy a house?
It depends on how soon you need the money and how much of a fall you could absorb. Since 2018 the S&P 500 lost money over one year in 16.8% of periods. This page is information for comparison and not a recommendation about any holding.
Should I keep my down payment in stocks?
Money needed within one or two years is exposed to falls that may not recover in time. The worst one-year S&P 500 result since 2018 was a 21.0% loss.
How much would my down payment need to recover after a fall?
A 20% fall needs a 25% gain to get back to even, and a 30% fall needs 42.9%. The calculator on this page shows the gain and the time for any loss.
Do I pay tax when I sell stocks for a house?
In a taxable account, selling at a gain creates capital gains tax, at a lower long-term rate if you held the shares for more than a year. Losses can offset gains.
When should I move my down payment out of stocks?
Many buyers move money they need within a few years into cash or short-term Treasuries, sometimes in stages. The right timing depends on your deadline and how much risk you can take.
Keep exploring
- Should I Move My Portfolio to Cash Before Things Get Worse?
- How Much Is Holding Cash in My Portfolio Costing Me?
- Should I Invest a Lump Sum All at Once or Spread It Out?
- What Selling in a Market Drop Has Cost Since 2018
- Koyfin Alternatives in 2026
- MSCI (Barra) Alternatives in 2026
- IBviz Alternatives in 2026
- Capitally Alternatives in 2026
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This page is an information baseline for comparison only. It is not investment advice and not a recommendation to buy, sell, replace, or transfer any specific asset, account, or firm. Past performance does not guarantee future results. All figures shown are illustrative.