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there is penalty exception for first time home buyers but limited to only $10k
You can take out a loan from your 401k to purchase a house. No penalties or taxes and you pay your 401k back with interest.
Yea you'll just get taxed heavily
Do you have a Roth IRA and this is your first home?
I switched to Roth IRA contributions only this year. It's a first home.
It's not recommended but http://www.rothira.com/blog/should-i-use-a-roth-to-buy-a-house
Do not use 401k - the penalty tax is huge / you would effectively be paying double for the down payment
You can avoid the penalty 10% in the first 10k if you are purchasing your first home - make sure you add the tax withholding to your distribution it is allowed as part of the distribution- or you can take a loan that is repaid to yourself w interest.
If you have a Roth IRA you can withdraw the contribution portion anytime without penalty
What EY1 said. You can borrow up to $50k from your 401k and pay it back with interest over 30 years. Won't show up as a loan on your credit report either. Obviously make sure this option makes sense for you as many times borrowing against your 401k is an awful idea.
I borrowed from 401(K) for mine, paid it back in 3 years while still contributing max amount each year. Made sense because prices were down and I didn't want to wait 2-3 years and be priced out of the market. I'm in CA and home prices are nuts.
EY peeps just log into 401k.com and model a loan. All the info u need is there. Not rocket science.
Not recommended. Borrowing against your own retirement by paying yourself interest and missing out on compound interest while you've taken it out. Plus, if you leave your firm before paying it back, the whole thing comes due in a lump sum. Could handcuff your career options in the case an opportunity were to present itself.
When you take out a loan on your 401k don't you have to report that to the bank though when securing financing? I imagine the interest/payments on a 20k + loan would be pretty high.
I started saving in a Roth for that very reason. Took it out when I bought my first home there is no penalty and the money is already taxed.
Please talk to someone there should t be a penalty if it goes directly to your home
I borrowed against my 401k for a home. Ask the lender if the loan would count against the debt to income ratio before you do.
I pulled funds from a 401k at an old employer to supplement my down-payment and there was no penalty. Just regular tax rate. I was a first time home buyer.