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I have a clarification on withdrawing money from my 401K for the first time Home Buyer. In my understanding, there is no interest for withdrawing money for the first time Home Purchase.

My question is, when i withdraw x amount , can i use the portion of the amount for Home purchase and rest for Home renovation ? Whether i can split my amount based on my need ?

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If you withdraw money, even under a hardship clause like for purchasing a house, you'll still own taxes and a penalty on it.

If you are talking about a 401K loan, a loan will have no taxes/penalty, but you'll repay the loan with after-tax reduction of your salary. Max is 50k or 50% of the balance. It maybe up to the 401K administrator whether all of the funds need to go to the down payment and closing costs or whether some can go towards renovations.

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  • I wish to have some of the amount for renovation and put the remaining for Down Payment / Closing Cost.
    – goofyui
    Commented Jan 24, 2017 at 23:06

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