#1
#1 out of 1
business5h ago
More people are using retirement savings to fund down payments
- Latest trend shows more homebuyers using retirement savings to fund down payments, despite tax penalties and penalties on loans.
- Many buyers consider 401(k) loans, but repayment and job loss risks can make the option costly.
- IRS rules cap loans at 50% of vested balance or $50,000, guiding how much can be borrowed for a home.
- Hardship withdrawals are allowed but usually taxed and penalized, altering retirement savings.
- IRAs allow up to $10,000 withdrawal for first-time homebuyers without a 10% penalty, under certain conditions.
- Median balances show 401(k) and IRA savings are substantial, but may still lag a typical down payment.
- Almost half of buyers used personal savings to fund down payments in the 2024–2025 period.
- Overall, 6% of homebuyers and 11% of first-time buyers tapped 401(k) or pension money for down payments.
- Analysts advise planning and understanding plan rules to balance retirement goals with homeownership.
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