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Hoping to become a homeowner soon? Find out how you can use your IRA to help with financing.

Hoping to become a homeowner soon? Find out how you can use your IRA to help with financing.

Should You Use Your Roth IRA to Buy a Home?

With some restrictions, you can take money from your Roth IRA to buy a home. But it’s wise to exhaust other options first.

April 19, 2018

Just because you can, doesn’t mean you should.

It’s an early lesson that applies to plenty of life’s quandaries, including this one: It’s pretty easy to tap your Roth IRA to buy a house, especially as a first-time homebuyer. But should you? Maybe not.

Using a Roth IRA for a home purchase

The Roth IRA rules for distributions make the account a tempting source of cash. To understand them — which is key to following them — it helps to pretend the money in your account is in two envelopes: the contributions you’ve made, and the investment return those contributions have earned.


You can withdraw the contributions you’ve made to your Roth IRA at any time, for any reason. There is no tax or penalty, no matter how you spend the money or when you take the distribution.


If it’s been at least five years since you made your first Roth IRA contribution:
    • You can pull out up to $10,000 in investment earnings tax- and penalty-free to put toward your first home. The IRS has an uncharacteristically loose definition of “first” here: You’re considered a first-time homebuyer if you or your spouse haven’t owned a principal residence in the past two years.

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