Use 401(k) To Buy Your Home

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Many home buyers are not aware that they are able to withdraw from their 401(k) to purchase.

How much can you withdraw?

  • $50,000,
    or
  • 50% of your 401(k) account balance

General IRS Rule: Maximum 401(k) Loan Amount

Home Purchase Loan Terms

401(k) loans must usually be repaid within 5 years, but for a primary residence purchase, many plans allow a longer repayment period, often 10–15 years.

Important Conditions

Your employer’s plan must allow loans

Not all 401(k) plans permit borrowing.

You repay yourself (with interest)

Payments go back into your account, but you repay with after-tax dollars.

If you leave your job, the loan may become due quickly

If not repaid, it can be treated as a withdrawal → taxes + 10% penalty (if under age 59½).

401(k) Loan vs. Withdrawal for Home Purchase

A loan is different from an early withdrawal:

Loan: No taxes if repaid properly

Withdrawal: Taxes + penalty usually apply

401(k)s do not have the same first-time homebuyer penalty exception that IRAs do.

Disclaimer: We are not an accounting firm or financial advisor. Please consult a licensed professional for more details.