Using Retirement Savings to Buy a First Home
Buying a first home is one of the biggest financial steps many people take, and for some, tapping into retirement savings can help overcome the down payment hurdle.
- Current IRA withdrawal limit: First-time buyers can take up to $10,000 penalty-free, but with today’s median home price above $440,000, this covers only about 2% of the cost.
- Proposed legislation: The Uplifting First-Time Homebuyers Act would raise the cap to $50,000, aligning better with modern housing prices.
- Stock market vs. home equity: Investing $50,000 in stocks at 10% annual return could grow to ~$129,700 in 10 years, while using it as a down payment on a $400,000 home could generate equity gains of more than $230,000.
- Regional equity gains: In high-growth markets like San Jose, San Francisco, and San Diego, equity gains have reached hundreds of thousands of dollars, far surpassing typical stock returns.
- Moderate markets: Even in less aggressive markets, homeowners often build wealth faster than renters or those relying solely on retirement accounts.
Using retirement savings strategically for a first home can be a powerful wealth-building tool, turning a starter property into a long-term financial foundation.
Source>> https://www.nar.realtor/news/economists-outlook/using-retirement-savings-to-buy-a-first-home