Am I allowed to take a 401k withdrawal for a down payment on a new home?

Answer by  tamarawilhite (17883)

No, not without having to pay taxes on the withdrawal with the early withdrawal penalty. Thus you will lose about half of the money taken out for this purchase. However, principal can be taken out of your Roth IRA for the purchase of your first home without any tax penalties.

Answer by  lynn (821)

If your 401k is set up where you can take an early withdrawal you can, however, anytime you take one you have to pay a penalty on your income tax return the following year of ten percent of the withdrawal amount that you took even if taxes were taken out at the time of the withdrawal.

Answer by  appliancegal (49)

Yes, you are allowed to take a withdrawal from your 401k without any pentaties for a down payment on a house. You might even be able to take it out as a loan against your 401k. You then pay it back in 2 yr or 3 yr or 4 yr payments.

Answer by  mitchelld (122)

You are allowed to use 401k money for a down payment. The real issue is a penalty. The IRS allows the withdrawal penalty free only to finance a primary residence and only if you prove a personal hardship such as mortgage insurance, a second mortgage or unacceptable mortgage terms

Answer by  Gabriel (2146)

A withdrawal, probably not. But some programs allow you to take out a loan for that purpose. Check with the program administrator.