Can You Use a Roth IRA to Buy Your First Home? Here’s What You Should Know

If you’ve ever heard someone say you can use a Roth IRA to buy your first home, you’re not wrong. But you’re also not getting the full story.

This is one of those topics that sounds simple on the surface and gets misunderstood fast. The rules matter, and getting them wrong can cost you money you didn’t need to spend.

Let’s break it down clearly.

What You Can Always Withdraw From a Roth IRA

With a Roth IRA, you can withdraw your contributions at any time. No taxes. No penalties. No age requirement. No special exceptions needed.

That’s not a first-time homebuyer perk. That’s simply how Roth IRAs are structured.

This is where a lot of online advice stops, and where people start making assumptions that can get them into trouble.

Where Things Get Tricky: Earnings and the 5-Year Rule

Earnings are a different story.

If your Roth IRA has been open for less than five years, withdrawing earnings will generally trigger income taxes and a 10 percent penalty. Even if the money is being used to buy your first home.

There is a first-time homebuyer exception that allows up to $10,000 in earnings to be withdrawn without the penalty, but only if the Roth has been open for at least five years. Depending on timing, taxes may still apply.

This is the part that trips people up. The fine print matters.

Should You Use a Roth IRA to Buy a Home?

Sometimes it can make sense. Sometimes it absolutely does not.

Using retirement funds can affect your long-term financial picture, not just your down payment. That’s why this decision should never be made based on a headline or a social media post.

Your timeline, account age, contribution history, and overall goals all matter.

Final Thoughts

A Roth IRA can be a powerful tool, but only when it’s used correctly. Before tapping into it for a home purchase, make sure you fully understand what you’re withdrawing and why.

If you’re considering buying a home and want to talk through smart ways to prepare, I’m always happy to help you think it through.

Buying a home should feel informed, not rushed.