> For the complete documentation index, see [llms.txt](https://advisorhub.syntheticfi.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://advisorhub.syntheticfi.com/product-deep-dive/client-buying-a-house.md).

# Client Buying a House

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## Finance a home cheaper, and skip the down-payment sale

SyntheticFi can supplement or replace a jumbo mortgage at a lower rate, with interest generally deductible as a capital loss and no mortgage interest deduction cap. The client keeps their portfolio invested and avoids capital gains on a down payment. The strategy is documented in a published CBOE article.
{% endhint %}

A home purchase is often the largest transaction a client will make. Traditional mortgages are expensive, only partially deductible (capped at a set principal amount, currently $750K), and usually require selling assets for the down payment. SyntheticFi can address all three.

### How it works in practice

* **Replace or supplement the mortgage.** The client borrows against their portfolio and puts the proceeds toward the purchase, at a rate typically below a jumbo mortgage. They can stack it with a traditional mortgage to also capture the mortgage interest deduction within IRS limits.
* **Skip the down payment sale.** A traditional 20% down payment means selling a large chunk of assets, which for an appreciated portfolio means a real capital gains hit. SyntheticFi delivers the cash without a sale, deferring those gains.
* **Deduct the interest.** Mortgage interest is only deductible up to the cap (currently $750K of principal). SyntheticFi interest is generally deductible as a capital loss regardless of loan size, which can mean meaningful additional tax savings each year on a large loan.

### A worked example, from the CBOE article

The CBOE article walks through an example, a client with a $3M portfolio buying a $2M home:

* He stacks a traditional mortgage (currently deductible up to $750K) with a SyntheticFi loan for the balance.
* Stacking the two deductions drops his blended after-tax financing rate below what he'd pay on the mortgage alone.
* In the article's example, that comes out to roughly $49K in annual financing savings, plus about $35K in deferred capital gains by not selling for the down payment, for a first-year benefit around $84K.

See the CBOE article for the full walkthrough with charts and tax math.

{% file src="/files/Be8X6YiNstm8AmQAELKx" %}

### Risks worth flagging to the client

* **Margin call risk.** The portfolio backs the loan, so a large market drop could trigger a call. The client controls the cushion by how much they borrow, borrowing a smaller share of the portfolio leaves more room. Some clients also pair SyntheticFi with a HELOC backup.
* **Rate risk on fixed loans.** If a client locks a fixed rate and rates later fall, refinancing early has a cost that depends on the rate difference. Laddering the loan across multiple expirations helps mitigate this.

***

[\* Important Disclosures](/disclosures.md)


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