If you have a stock portfolio, you can borrow money for your home down payment at institutional-grade rates — without selling a single share. SPX box spreads let you tap capital markets directly, at rates only ~0.25% above what the U.S. government pays.
A tool used by institutional investors — now accessible to retail investors with margin-enabled accounts. Updated March 2026.
Box spreads bypass bank profit margins, letting you borrow directly from capital markets at rates ~0.25% above U.S. Treasury — the same rates large institutions pay.
3.75%–4% as of March 2026Selling stocks to fund a down payment triggers capital gains. Box spreads let you borrow without selling, deferring capital gains indefinitely while keeping full market exposure.
No sell → no taxable eventThe box spread "loss" is treated as a capital loss. This offsets capital gains you'd otherwise owe — effectively lowering the net borrowing cost below the stated rate.
Interest → capital loss deductionChoose expirations from months to years — expirations through Dec 2031 are available. You can close early (recovering unused interest) or roll forward at expiration.
Dec 2026 through Dec 2031 availableUnlike a PAL margin loan — where your rate floats with the Fed Funds rate — a box spread locks in your borrowing cost at execution. No surprises if rates rise.
Rate locked at trade executionMake the opposite trade to lend money at 3.75%–4% — better than savings accounts or money market funds. Most interest earned is taxed as long-term capital gains.
Better return than HYSADated: March 2026. Rates are as of this date and change daily.
This is a powerful tool we've used both personally and for some clients. It applies only if you have a sizable stock portfolio. Many people sell stocks to generate a down payment for a home purchase — this triggers capital gains taxes and reduces your stock market exposure. An alternative: borrow against your portfolio instead.
Part of the buy-borrow-die playbook. Also known as a Pledged Asset Line (PAL) or margin loan. You don't sell anything, and you get access to a loan which can be used for your down payment. But interest rates can be high — typically 5% to 5.5% depending on your broker and account size.
Less widely known outside finance circles, but a very powerful tool. It allows you to borrow money directly from the capital markets at institutional-investor rates — no bank needed. Here's how it works:
A box spread consists of 2 call options and 2 put options on the S&P 500 index (SPX). Once the trade is executed, cash "shows up" in your account, ready to be withdrawn. On the future option expiration date, cash will be debited from your trading account.
The options are designed such that, regardless of how the stock market moves, your "loss" will be a fixed, predetermined number. This loss is the interest you pay on the cash you borrowed. You can use that cash for any purpose — home down payment, renovation, etc. — as long as you keep enough collateral in the account.
| Expiration Date | Duration | Annualized Rate |
|---|---|---|
| Dec 2026 | 291 days | 3.90% |
| Dec 2027 | 653 days | 3.83% |
| Dec 2028 | 1,018 days | 3.77% |
| Dec 2029 | 1,390 days | 3.80% |
| Dec 2030 | 1,754 days | 3.87% |
| Dec 2031 | 2,118 days | 3.83% |
You are borrowing at rates only around 0.25% higher than those at which the U.S. government borrows — a remarkable advantage over retail mortgage or margin loan rates.
Duration is flexible: expirations are available through December 2031, giving you up to ~5 years of fixed-rate borrowing. You can also close the options early or roll them forward if needed. You can even structure it to pay back a small amount periodically.
No capital gains tax — since you don't sell any stocks. In fact, the interest you pay is treated as a capital loss, which can result in a tax deduction. This offsets capital gains you might otherwise owe, reducing your net borrowing cost further below the stated rate.
You need portfolio margin and options trading enabled in your brokerage account, and you must place the 4-option trade as a single order (not four separate orders). Also, avoid withdrawing funds anywhere close to your full portfolio value — you can get a margin call if your portfolio crashes. We're personally comfortable borrowing 30–50% of portfolio value.
You can make the opposite trade and lend money at 3.75% to 4%. If you're saving money for a down payment, this can be better than a savings account, fixed deposit, or money market fund. Interestingly, the majority of the interest you earn will be taxed as long-term capital gains — even if you invest for less than a year.