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Another Source for Down Payment on a Home

How much down payment will I need for a Crofton townhouse?

The average sold price for an attached home in Crofton in May 2014 was approximately $251,500. Using an FHA loan, the 3.5% down payment would be $8,803.00. Using a 95% conventional loan, the down payment would  be $12,575.  In both cases, sellers are allowed to pay some of the buyers’ closing costs if they’re willing.

In other words, you’d be a lot closer to buying a home if you just had an extra $10,000. Right?  

Check out this excerpt from an article by real estate columnist, Pat Zaby:

Another Source for a Down Payment

IRA 250.jpg

Most taxpayers know they will pay a 10% penalty for withdrawing funds from their IRA before they turn 59.5 years old.  BUT… There is an exception for first-time home buyers that allows a penalty-free withdrawal up to $10,000 per person if they haven’t owned a home in the previous two years.

This would allow a married couple who each have an IRA to withdraw a lifetime maximum of $10,000 each - $20,000 total, penalty-free for a home purchase. In many cases, the money would be used for a down payment or closing costs.  However, some buyers might consider this source to increase their down payment so they could qualify for a loan without mortgage insurance or a lower interest rate.

Another interesting fact about this provision is that the taxpayer making the withdrawal can use it to help a qualified relative which includes children, grandchildren, parents and grandparents.

I am not an accountant or attorney, so before using IRA funds for a home purchase you should get expert advice from your own tax professional concerning your situation.

Let’s Get Started!

Contact me today or visit my website for information about the home-buying process. No cost or obligation, just information to help you decide if you’re ready.  The payoff for you will be huge: you can have the option to fire your landlord and enjoy the tax benefits of home ownership, not to mention all the other benefits of home ownership.

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