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I understand that as a first-time home buyer I can withdrawal up to $10,000 from my IRA without penalty within 120-days of signing the purchase agreement or closing on the home. Income taxes still apply of course, but I at least avoid the 10% penalty.

With that being said, I signed a purchase agreement/agreement of sale on October 1, 2016 to BUILD a home that should be completed in March/April 2017. The deposit for this amounted to around $28,000 of which I payed for out of pocket. I've been thinking about withdrawing $10,000 from my IRA to "back-fill" my savings account, but since I have 120 days to do so, could I take this money out in January 2017? I guess the answer would be yes, since I would be closing on the home within 120 days after withdrawing as well, but I want to be certain.

Bonus - do mortgage companies care if you use retirement funds when purchasing a home?

Thanks!

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  • So you wouldn't really be using the IRA money for building the house, but for padding your savings? I would just leave the money in the IRA. Don't take it out just in the off-chance you need it, especially when you already have money in savings. If you want to replenish your savings do it by putting some of your income in there.
    – Brendan L
    Commented Oct 28, 2016 at 22:50
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    @BrendanL This is the right answer. You should put it as an answer so we can upvote it.
    – Xalorous
    Commented Nov 3, 2016 at 19:15
  • Is this a traditional IRA, or a Roth?
    – Ben Miller
    Commented Nov 5, 2016 at 12:28

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So you wouldn't really be using the IRA money for building the house, but for padding your savings? I would just leave the money in the IRA. Don't take it out just in the off-chance you need it, especially when you already have money in savings. If you want to replenish your savings do it by putting some of your income in there.

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