How to use severance pay to buy a home in Colombia

Last updated: June 2026

Doña Luz had her severance pay sitting untouched in a fund, unaware that this money could be just the down payment she needed for her apartment. When we explained that the law allows her to withdraw it for housing, she could hardly believe it. It happens to so many people: using their severance pay to buy a home. severance pay to buy a home It is a right of the Colombian worker, it is backed by law, and if used properly it can be the push that turns renting into owning a home.

In short: yes, you can use your severance pay to buy a home, And not just for buying. The law allows you to partially withdraw your severance pay to purchase a new or used home, build on your own lot, improve your house, or pay off a mortgage. To do so, you must demonstrate to the severance fund how you will use the money, with documents such as a purchase agreement. Here we explain the permitted uses, the required paperwork, and the actual processing time.

What does the law allow you to use severance pay for, such as housing?

Severance pay isn't just any savings: the law has designated specific uses for it, and housing is one of the main ones. The legal framework (Law 50 of 1990 and Decree 1072 of 2015, among other regulations) allows for partial withdrawals for various purposes related to your home.

• Buy a new or used home. The most frequent use, ideal for boosting your down payment.
• Build on your own lot. If you already own the land, you can use your severance pay to build the house.
• Improve or expand your home. For repairs that make your home safer and more dignified.
• To pay off a mortgage or a home loan. To pay off the debt you already have on the property.

The key is that the money is earmarked for your home, not just any expense. That's why the fund will ask you for proof of how the money will be used.

What documents do they require to withdraw severance pay for housing?

This is where many procedures get stuck: due to incomplete paperwork. The severance fund needs to verify how the funds were used, so gather the necessary documents for your situation well in advance.

• Your identity document. The original ID card and, in many collections, an enlarged photocopy.
• Promise or contract of sale. Signed and authenticated by the parties, when the withdrawal is for purchase.
• Certificate of freedom and tradition. Of the property you are going to buy or on which you are going to build, to prove ownership.
• Quotes, whether it's for construction or improvement. Some funds require budgets for the work.

I requested the exact list from your fund before starting, because each entity adjusts the details. Having everything complete is what ensures the process isn't returned.

How long does it take to receive severance pay?

Once you meet all the requirements, the payment shouldn't be delayed. The regulations state that the fund must pay within five business days of you submitting everything correctly. If more time passes without a valid reason, you can file a claim.

That's why it's best not to submit incomplete paperwork: each missing document restarts the clock. If your withdrawal is to reinforce your home's entrance, calculate exactly how much you need by reviewing our guide. down payment to buy a home, That way you know exactly how much of your severance pay to allocate.

Is it advisable to use severance pay to buy a home or leave it untouched?

This is the honest question. Severance pay is your safety net if you lose your job, so emptying it completely for housing is risky. But using it partially and strategically, to take the leap into homeownership, usually makes sense: paying rent doesn't build wealth; paying your own mortgage does.

The decision depends on your job stability and how much of a financial cushion you want to maintain. Before deciding, look at your borrowing capacity and understand How mortgage loans work, Because often severance pay is combined with a loan and a subsidy to set up the entire business.

Where can I check the official rules on retirement?

The rules for withdrawing severance pay are in the law, not based on what a facilitator says. To learn the official procedure step by step, you can consult the guide. Ministry of Justice (LegalApp), which explains how to withdraw severance pay for housing. And if you want to see the complete regulation governing these uses, it's published in the Public Service Regulatory Manager. Choosing the official source protects you from false promises and charges that no one should make you pay.

Table: Permitted uses of severance pay and the supporting document

The fund needs to verify how you intend to use the money. This guide links each use to the document that typically supports it, although each fund adjusts the exact list.

Permitted use in residential setting	Key supporting document
Buy a new or used home	Authenticated promise or contract of sale
Build on your own lot	Certificate of freedom and encumbrances of the land (and construction quotes)
Improve or expand the home	Ownership support and arrangement quotes
Release mortgage or pay down loan	Certification of the balance and details of the housing loan

General reference. The exact list of documents is defined by your severance fund. Request it before starting and verify the current requirements.

Common mistakes when completing this procedure

• Submitting incomplete paperwork. Each missing document restarts the payment deadline; I gathered everything before filing.
• Using money for an unauthorized purpose. Severance pay can only be withdrawn for the purposes stipulated by law; other uses are not authorized.
• Empty your savings completely. Severance pay is your safety net if you lose your job; partial withdrawal is usually the most prudent course of action.

Frequently asked questions about using severance pay for housing

Can I withdraw only part of my severance pay for housing?

Yes. The law allows for partial withdrawals, meaning you're not obligated to withdraw everything. You can withdraw only the amount you need for your home and leave the rest as a safety net, which is often the wisest course of action.

Can severance pay be used to buy a plot of land or only a finished house?

They can be used to buy a new or used home, build on your own lot, improve your existing home, or pay off a mortgage. To build, you need to prove ownership of the land with a certificate of title and encumbrances, and some funds require construction quotes.

How long does it take for the fund to pay me?

Once you've submitted all the required documents, the fund must pay within five business days. If there's an unjustified delay, you have the right to demand compliance with that deadline.

Can I use severance pay along with a housing subsidy?

Yes. It's one of the smartest moves: combining unemployment benefits, credit, and subsidies to raise the down payment. Check your compensation fund's subsidy and national programs to see how much you can combine.

How Hepacom accompanies you

At the Hechos Para la Comunidad Foundation, we frequently encounter families who have their severance pay saved up, unaware that this same money could be the down payment on their home. It's not a lack of money, it's a lack of clear information. That's our mission: to ensure that the path to decent housing doesn't depend on guesswork amidst bureaucratic red tape and fine print.

We help you understand how you can use your severance pay, gather the correct paperwork so your withdrawal goes smoothly, and combine that money with a loan and a subsidy. Find more guides on housing and your rights in our blog, Discover all our work in the Hepacom homepage And if you need guidance, write to us at donaciones@hepacom.org.

Information guide. The process is handled by the official entity or your severance fund. Verify the requirements and current deadlines through the official channels before making any decisions. Hepacom does not charge fees or manage payments or procedures.