Using an IRA for a house purchase: Pros and cons
Thinking of using your IRA for a down payment on a home? IRS rules allow it for first-time buyers. Roth IRA withdrawals avoid penalties and taxes on contributions. Traditional IRA withdrawals face income tax on the entire amount. Experts caution against tapping into retirement funds for home purchases due to long-term costs. Consider speaking with a financial professional for alternative ideas. Financial experts recommend exploring creative ways to fund a home down payment without sacrificing tax-free growth. Options include tapping a 401(k) for a loan with low interest rates and repayments credited back to the account. Government-backed mortgages, like FHA and VA loans, offer low or no down payment options. Down payment assistance programs are also available based on income and location. While using IRA funds for a home purchase is an option, it may impact future retirement savings and incur tax consequences. Consider it a last resort after exploring other alternatives. The IRS allows first-time homebuyers to withdraw up to $10,000 from an IRA penalty-free, with Roth IRA holders having more flexibility in accessing funds. 1. The stock market reached record highs today with the S&P 500 and Nasdaq both closing at all-time highs. Investor optimism was fueled by strong corporate earnings and positive economic data.
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Read more at finance.yahoo.com: Can you use an IRA to buy a house? Here’s when it makes sense.