Independent neighborhood guide, not affiliated with any homeowners association, property manager, city or official board.
Updated October 23, 2026
Most people know there’s usually a 10% penalty for taking money out of an IRA before age 59½. Fewer know there’s an exception for first-time home buyers.
It can help with a down payment or closing costs, or let you put down enough to avoid mortgage insurance.
Here’s how it generally works.
The first-time buyer exception
You can withdraw up to $10,000 from an IRA without the penalty toward a home purchase, as a lifetime limit. You generally count as a first-time buyer if you haven’t owned a home in the past two years. A couple who each have an IRA may each use their own $10,000.
You can also use it to help a qualifying relative, such as a child, grandchild or parent, buy a first home.
without the penalty isn’t always untaxed
With a traditional IRA, you’ll usually owe income tax on the withdrawal. With a Roth IRA, your contributions can come out without tax, and earnings may be untaxed too if the account meets certain rules.
Get advice first
Rules and limits can change, and the right choice depends on your situation. Talk with your tax professional before you withdraw anything. Then start with the buyer questionnaire.
This is general information, not financial, tax or legal advice. Talk with your lender, CPA or attorney about your situation.
A simple plan for your IRA down payments move
I’ve been helping people buy and sell homes across the west metro for about two decades, and I build and remodel luxury homes too. I’ll help you see both what a property is and what it could be.
Getting the house ready, or making it yours
If you’re selling and want repairs handled before buyers see them, Super Crew Contractors can give you an estimate. If you’re ready for something custom, Ivy Lane Homes does luxury home building and remodeling. And a quick coverage check with Intrinsic Insurance before closing can save you a surprise. For the local picture, read my Chaska homes guide or browse neighborhoods in Chanhassen and Victoria.
Your next step in IRA down payments
Every move is different. When you’re ready to talk about yours, I’m a call or text away.
Please note: I don’t handle rentals or property management. I work with buyers and sellers, and that’s where I can help you most in IRA down payments.
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