Would it ever be ok to tap into 401k for a first time home purchase?

No

Ok. Thanks.

Money is so cheap right now, no need to tap 401k

This is where I completely disagree with Dave Ramsey - that one should stop investing until debt is paid off. You loose that time in the market, but I guess I don't see millions of people following me vs following him.

I don't disagree with numbers 1 and 2, but 3 is way off.


Plenty of people could afford a monthly note on a house but have trouble saving up the large sums you would need for a down payment. It just depends on your situation.

you can get a house for 5% down...if you can't say 5% you don't need a house

It is not a horrible idea if the following pertain to you.

1. if you can avoid a penalty on the withdrawal. Alot of 401k's allow you to withdraw penaty free for a first time home purchase. You still have to pay taxes on it though.


2. How much have you been putting in? More than the maximum matching? IN other words my compay will match up to 6% of my paycheck. But I put in 10%. i have been putting more in on my own volition, money that I could be saving for a down payment. taking that extra 4% out does not seem so bad now does it?

3. If you have 10% saved up and you can purchase the house, but putting an extra 10% down(money from your 401k) will allow you to avoid mortgage insurance and get a lower rate, then there could be rather significant savings in the long run. As long as items 1 and 2 pertain to you still.

just my opinion. Some of the idiots on this board take them and their opinions way too seriously. everyone's situation is different.

There is no single answer that applies to every situation. You have to consider the circumstances and determine whether the costs of using 401(k) money are acceptable. Some home buying opportunities have limited time frames, and the benefits of acting may exceed the costs of using 401(k) money for the purchase.

And then there are different types of money from the 401(k). If the money is a loan from the 401(k) for the down payment, then it might make sense where a distribution might not.

Rather than relying on answers from internet message board posters, you should consult with someone knowledgeable about retirement investing and income taxes to analyze the facts and circumstances of your situation. They should be able to provide you with specific advice rather than a blanket generalization.

More information on the situation would provide better answers.

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If you can't save money to do the down payment on the house, are you going to have the resources to pay a monthly note?

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