We are buy our first house and we are trying to get a higher down payment to make out mortgage payments low. Any suggestions.
Hi Donna, currently, IRS law allows individuals to take distributions from their traditional IRAs to pay up to $10,000 of first-time homebuyer expenses without incurring the 10% early withdrawal penalty that usually applies to withdrawals from a traditional IRA before age 59 1/2. Keep in mind that even though the penalty is waived, you will still be required to pay taxes (as applicable) on the traditional IRA withdrawal itself.
Additionally, the rules for taking a distribution from a Roth IRA to finance a first-time home purchase are slightly different than those for a traditional IRA. Remember that a withdrawal taken from a Roth IRA for the purchase of a first home is considered a qualified distribution after the account has been open for five tax-years. As such, any distribution taken from a Roth for that purpose and under those conditions will be both income tax- and penalty-free.
I would suggest you also consult a local CPA or Tax professional as well.