The Marginal Dollar: A Priority Order

Work down this list. Each rung is funded before the next receives anything.

1.

Employer match. A 50% or 100% match is an immediate, risk-free 50% or 100% return on the dollar. Nothing else in finance competes, and every plan that offers one is offering it only this year. Never trade the match for a larger down payment.

2.

An HSA, if you are HDHP-eligible. Deductible going in, untaxed while invested, tax-free coming out for medical costs — the only triple-tax-free account in the code (section “Accounts For Medical Expenses”). Small dollars, unmatched treatment.

3.

The down payment you actually need, and not a dollar more — held in T-bills, a money market fund, or a maturity-matched CD, never in equities, whenever the purchase is inside three years (section “Liquidity and Rolling Investing”). Size this against the minimum that clears your underwriting and PMI threshold, not against the largest down payment you could theoretically assemble.

4.

The rest of the elective deferral — $24,500 in 2026, $32,500 at 50 and over (section “Retirement accounts”).

5.

Backdoor and mega-backdoor Roth, to the $72,000 IRC §415(c) plan limit if your plan permits after-tax contributions and in-plan conversion (section “Front-Loading of Tax-Advantaged Accounts”). This is the largest block of shelter available to a high earner and the one most often left on the table.

6.

Taxable brokerage.

7.

Extra principal on the mortgage — last, and only when it wins the comparison below.

Two rungs deserve a note. The third one is deliberately placed above the full deferral because a down payment you cannot assemble is not a plan, and PMI plus a jumbo-tier rate on an undersized down payment can cost more per year than the deferral shelters. But hold that rung to its minimum. The instinct to put 40% down because it feels safer converts liquid, diversified, tax-sheltered capital into illiquid equity in a single asset — which is the opposite of safety (section “Underwriting Your Own Income”).