Buy Without a Mortgage: Margin Loans & Securities-Backed Lines of Credit (SBLOC)

Here’s a path most people never hear about: if you already have a sizable portfolio of stocks, index funds, or bonds, you can borrow against it to buy a home — without a mortgage at all. You keep your investments (so you don’t sell and pay capital-gains tax), you skip the bank’s income checks entirely, and you can move as fast as a cash buyer. This is how someone with no W-2 job — a retiree, a business owner, an early-retiree — can buy a $750,000 house even after a bank denies them a mortgage.

It’s a real, legitimate tool. It’s also advanced and genuinely risky — you’re pledging a volatile, liquid asset (your portfolio) to buy an illiquid one (a house), and a market drop can force you to sell your investments at the bottom. This article explains both instruments plainly, the current rates, and exactly where the danger lives. This is not a beginner’s first move.

The two instruments (and how they differ)

Both let you borrow against securities you already own. The difference is mostly what you’re allowed to do with the money and who offers them.

• Margin loan. A loan inside a brokerage margin account, secured by the securities in it. You can use the money for almost anything — buy more stock, or withdraw it to buy a house. Interactive Brokers and Robinhood are known for the lowest margin rates. Fast, flexible, cheap — but with the fewest guardrails.
• Securities-backed line of credit (SBLOC), also called a “non-purpose loan” or Pledged Asset Line (PAL). A revolving credit line secured by a portfolio you pledge as collateral. The catch in the name: a non-purpose loan cannot be used to buy more securities — it’s meant for other things, like a home. Schwab (Pledged Asset Line), Fidelity, Wells Fargo, and Morgan Stanley offer these, usually starting around a $100,000 portfolio.

In both cases you pay a variable interest rate, there’s no fixed monthly principal payment (you can pay it back whenever, or let interest accrue), and your portfolio is the collateral backing the loan.

The rates (mid-2026)

The video that popularized this quoted a margin rate near 4.6% and made it sound far below a mortgage. In mid-2026 the gap is smaller — real, but modest. Verify the live number before you count on it; these float.

Two honest takeaways. First, the cheapest margin loan (Interactive Brokers) can beat a mortgage, but SBLOCs often price above one. Second, and more important: a mortgage locks your rate for 30 years, while every option here is variable — tied to a benchmark like SOFR or the Fed funds rate. If rates rise, your payment rises. You’re trading certainty for flexibility. (Rates: Schwab PAL, Fidelity SBLOC, Interactive Brokers; mortgage via Freddie Mac.)

How much you can actually borrow

You cannot borrow the full value of your portfolio — not close. The lender sets an advance rate (also called loan-to-value, or LTV): the fraction of your holdings it will lend against. It depends on how volatile the collateral is:

So a $1,000,000 diversified portfolio might support a line of roughly $500,000–$700,000. But borrowing near that ceiling is how people get wiped out (next section) — you want a large cushion.

Why do it? The real reasons

The rate is usually not the main reason. These are:

• No income qualification. A traditional mortgage requires provable, stable income — usually a W-2 (an employee’s wage statement). If you’re retired, self-employed, an early-retiree living off investments, or a foreign national, a bank may deny you even if you have the money, purely because your income doesn’t fit their box. Your portfolio doesn’t care about your W-2. (This is the same wall our foreign-national real-estate loans guide is about, from a different angle.)
• You don’t sell — so no capital-gains tax. Selling $500,000 of appreciated stock to buy a house can trigger a large capital-gains tax bill. Borrowing against it leaves the position intact, still invested and (hopefully) still growing. This is the mechanic behind the “buy, borrow, die” wealth strategy.
• Speed and strength. A margin draw can hit your account almost instantly, letting you make what looks like a cash offer — far more attractive to a seller than a financing contingency.

Worked example

Notice the trade-off: Option 3 avoids the tax and the income check, but replaces them with market risk on the collateral — which is the whole danger.

The risk that can wreck you: the margin call

This is the section the hype videos rush past. When you borrow against your portfolio, how much you can keep borrowing is tied to the market. Every lender sets a maintenance requirement — a minimum collateral value you must keep. If your portfolio falls below it, you get a margin call: repay part of the loan or add cash/collateral, fast (sometimes within a day). If you can’t, the firm sells your securities to cover the loan — and per the SEC’s investor alert on SBLOCs, it can do so with little or no advance notice, and you don’t get to choose which holdings are sold.

Play out the nightmare: the market drops 25%. Your $1,000,000 portfolio is now $750,000, but you still owe $500,000. You’re near or past the maintenance line. The firm forces a sale — locking in your losses at the bottom — and you can’t sell the house fast enough to raise cash, because a house is illiquid. That’s the core danger: you pledged a liquid, volatile asset to buy an illiquid one.

This guide is educational and is not financial, tax, legal, or investment advice. Programs, lender policies, and tax rules change. Consult a licensed attorney, CPA, and lender before acting.