Your Retirement Isn't Off-Limits
💰 Up to $10,000 penalty-free from your IRA
🔄 Borrow from your 401(k) and pay yourself back
✅ Roth contributions — always accessible, tax-free
A lot of people think their retirement savings are completely untouchable until they're 65. That's not true — and you're not being irresponsible for considering this.
The Down Payment Struggle
Here's what you're actually looking at for a down payment.
Minimum Down Payments By Loan Type
Loan Type | Min Down | Example ($350k home) |
Conventional | 3% | $10,500 |
FHA | 3.5% | $12,250 |
VA | 0% | $0 |
USDA | 0% | $0 |
Even at 3% down, that's still thousands of dollars. If your savings isn't quite there, your retirement accounts might be the bridge.
The IRA Exception
First-Time Homebuyer Withdrawal
The IRS lets you withdraw up to $10,000 from a Traditional IRA without the 10% early withdrawal penalty if you're a first-time homebuyer.
And "first-time" doesn't mean you've never owned a home.
📋 Who qualifies as "first-time":
- You haven't owned a principal residence in the past 2 years
- Your spouse also hasn't owned in the past 2 years (if buying together)
💍 Married? Each spouse can withdraw $10,000 = $20,000 total
⚠️ Important: You still owe income tax on the withdrawal — you're just avoiding the 10% penalty
⏰ Timing: Funds must be used within 120 days of withdrawal
Roth IRA Advantage
Roth IRAs work differently — and they're more flexible.
Contributions vs Earnings
Type | Access | Taxes | Penalties |
Contributions | Anytime | None | None |
Earnings | First-time buyer exception | None (if 5+ years) | None |
Since you already paid taxes on Roth contributions, you can pull them out whenever you want — no penalty, no taxes.
📌 The $10,000 first-time buyer exception also applies to Roth earnings if the account is 5+ years old
🏡 Ready To Get Pre-Approved?
We help buyers in 49 states • Soft credit pull • Fast turnaround
👉 Start at winthehouseyoulove.com
Once you know where the money's coming from, we can help you figure out how much house that actually gets you.
401(k) Loan
This is different from a withdrawal — you're borrowing from yourself.
How It Works
📊 Borrow up to 50% of your vested balance (max $50,000)
💵 Pay yourself back with interest — that interest goes back into YOUR account
🏠 Primary residence? Repayment may extend beyond the standard 5 years
Why This Can Be Smart
✅ No taxes or penalties (if you repay on time)
✅ Interest benefits you, not a bank
✅ Doesn't show up as debt on your credit report (not included in your DTI)
The downside is your money isn't growing while it's out of the market. But if it's the difference between buying now and waiting years, it can make sense.
⚠️ The Risk
If you leave your job before repaying, the remaining balance may be due quickly — or it becomes a taxable distribution.
What NOT To Do
401(k) Hardship Withdrawal
Some plans allow you to withdraw (not borrow) for a home purchase. This is usually a bad idea.
❌ You'll owe income tax on the full amount
❌ Plus a 10% early withdrawal penalty (if under 59½)
❌ You can't put the money back
If your plan offers a loan, do that instead. You'll keep way more of your money.
⏰ How Much House Can You Actually Afford?
Now that you know where the money can come from, the next question is: what does that get you?
I have a whole playlist that breaks down exactly how much house you can afford at different salary levels — so you can see real numbers.
👉 Watch next: How much house you can afford