Can we use our IRA funds for a house without penalty?

Guest 0.10 Dollars($)

My wife and I have bought a house recently. Just a week after closing, we came to know that we can use our IRA towards a first time home purchase and each person can take out $10,000 towards qualified acquisition costs. We have got a 80-10-10 mortgage, 10% down payment. Should we be able to use $10,000 from our IRAs without a penalty if we can put money in repaying our second mortgage based on 10% of the home.

sara

Hi Mike and Nila,

Welcome to the forums.

That's a good choice but I am afraid you can't go for it. The law does not allow one to take out IRA distribution to repay a first or a second mortgage.

The penalty that you are talking about can be avoided only if you are a first time buyer (not having owned you home for the past 2 years) and have decided to use the IRA money to pay qualified acquisition costs.

Thanks,

Sara

Guest 0.10 Dollars($)

Mike and Nila, you can use IRA funds to pay acquisition cost. But the house should be your principal residence. The funds should be used within 120 days of taking out cash from IRA account.

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