Did you know you can withdraw money from your IRA for your down payment to purchase a home? First time home buyers can withdraw up to $10,000 from a traditional IRA, penalty free! If your parents or grandparents have an IRA and are willing to gift you the $10,000, they can withdraw up to $10,000 from their IRA for their child, grandchild or parent to purchase a home.
The IRS defines a first time home buyer as anyone who has not owned a primary residence in the last two years. Consult with your CPA first, because it is important you understand that the money you withdraw from your traditional IRA will still count as taxable income, and that will mean for you. If you have a ROTH IRA for more than 5 years, you may withdraw your contributions (not your earnings) under the first time home buyer exemption penalty free and tax free!