Should you use your 401k for a down payment?

Did you ever think your 401k could be the superhero swooping in to save the day? Well, buckle up because I’ve got news for you – you can actually borrow money from your own 401k to make that down payment sparkle! 💸🏡

Now, I get it. The idea of dipping into retirement funds might make you do a double-take. But, let’s chat about the long-term game and whether this move could fast-track your dream home journey.

First-time buyer stress getting to you? Fret not! Your 401k is just one cool cat among other options – gifts from family, assistance programs, or low-down-payment wonders like FHA loans.

Here’s a quick rundown of what you can expect if you decide to dance with your 401k dollars. And, hey, before you make any moves, give your tax or financial guru a shout. It’s always good to have the dream team on your side.

Borrowing from yourself? Check if your 401k plan is up for it. Key deets coming your way:

  • Borrow up to 50% of your vested account balance, maxing out at $50,000.
  • No credit checks! Your mortgage lender will peek at it, though, so smaller loans might be a smoother ride.
  • Sweet deal on the interest rate – paying yourself back, not the bank. But, sorry, interest payments aren’t tax deductible.
  • Pay it back within 5 years, with automatic monthly deductions from your paycheck. Job change during repayment? Watch out for penalties!

Thinking of waving goodbye to your 401k funds? Hold on:

  • Withdrawal instead of a loan? Some restrictions may apply.
  • No “hardship exemption” approval for a home down payment.
  • Income tax and a 10% Federal tax penalty if you’re younger than 59 1/2.

As you can see, borrowing is the name of the game for many first-time buyers. Ready to dive deeper into this 401k adventure? I’m all ears and here to chat. And don’t forget to loop in your tax whiz, financial genius, and lender for the full scoop.

Exciting times ahead! Let’s unravel the possibilities together.

Hi there!

I'm Morgan and I love helping professionals in the aviation industry make their move to Atlanta as smooth as a greased landing.  Whether its relocation, buying for the first time, or selling luxury and aviation real estate properties, I can help you transition smoothly.  

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Sharpsburg, GA 30265


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Hi there!

I'm Morgan and I love helping aviation industry professionals make the move to Atlanta through relocation, buying for the first time, or selling luxury and aviation real estate properties.  

schedule your free consultation


My Listings


All Articles

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