If you’re looking to increase your down payment and have a Roth IRA account, you could withdraw without tax or penalty to help make your dream purchase a reality.
According to CNBC, qualified first-time home buyers—or those who have not owned a house as a primary residence in at least two years—can withdraw up to $10,000 against their Roth IRA and avoid the 10 percent penalty generally imposed on those who pull funds prior to the age of 60. To avoid the taxes that would traditionally be imposed, you must have had the Roth IRA account open for at least five years.
The funds must be used within 120 days of the distribution and can be used to pay for expenses including a down payment or closing costs. Important to note that the $10,000 earnings exclusion is a lifetime limit.
Check with your financial advisor to see if a Roth IRA distribution makes sense for your home pursuits.
For more on setting up a Rota IRA for a home purchase down the road, check out CNBC’s full article here.