Down Payment for Home Loan. 

Locate other sources for your down payment. You may be surprised to find other options.

Most taxpayers know that they will pay a 10% penalty if they withdraw funds from their IRA before they turn 59.5 years old.  There is an exception for first-time home buyers that allows a penalty-free withdrawal of 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, penalty-free for a home purchase. In many cases, the money would be used for a down payment or closing costs on your NEW home in Cheyenne.  

 However, some buyers might consider this source to increase their down payment so they could qualify for a loan without mortgage insurance. If the taxpayer qualifies for the penalty-free withdrawal, there may still be taxes due.  Contributions to traditional IRAs are made with before-tax dollars and the tax is paid when the funds are withdrawn. 

Since Roth IRAs are made with after-tax dollars, there is no tax due when the funds are withdrawn. Another interesting fact about this provision is that the taxpayer making the withdrawal can help a qualified relative which includes children, grandchildren, parents and grandparents. Home buyers who are considering using IRA funds for a home purchase should get expert advice from their tax professional concerning their individual situation.

I would be happy to speak with you regarding all of your HOME BUYER needs. Contact me anytime to let me help you find your dream home in Cheyenne,Wyoming. Need additional help or information?  Follow this link for HOME BUYERS TIPS from my website.