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Can I use my 401k to buy a home?

By Bob Millaway, South Jersey Community Expert & REALTOR®

Yes, you can use funds from your 401k to buy a home. You may take a loan from your 401k (up to $50,000 or half the vested balance) that you repay with interest, or take a hardship withdrawal if your plan allows. Withdrawals before age 59.5 incur a 10 percent penalty plus income taxes, though first-time homebuyer withdrawals up to $10,000 in earnings may avoid the penalty. Check with your plan administrator and tax advisor before making any moves.

Why It Matters

Using retirement funds for a home purchase can accelerate your timeline, but it reduces your retirement savings. Understanding the rules helps you make an informed trade-off.

Related Questions

What should I look for during an open house? How much should I save for a down payment? What are closing costs and how much are they? What loan options are available for first-time buyers? What questions should I ask my real estate agent when buying?

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