What is the best way to get cash from my retirement accounts for a home down payment?
You can withdraw the contributions you made to Roth IRA tax free. Any withdrawals from Roth IRA count first towards the contributions, then conversions, and only then towards the gains which are taxable. You can also withdraw up to $10000 of the taxable portion penalty free (from either the Traditional IRA or the Roth IRA, or the combination of both) if it is applied towards the purchase of your first primary residence (i.e.: you don't own a place yet, and you're buying your first home, which will become your primary residence). That said, however, I cannot see how you can buy a $250K house. You didn't say anything about your income, but just the cash needed for the down-payment will essentially leave you naked and broke. Consider what happens if you have an emergency, out of a job for a couple of months, or something else of that kind. It is generally advised to have enough cash liquid savings to keep you afloat for at least half a year (including mortgage payments, necessities and whatever expenses you need to spend to get back on track - job searching, medical, moving, etc). It doesn't look like you're anywhere near that. Remember, many bankruptcies are happening because of the cash-flow problem, not the actual ability to repay debts on the long run. Given that utilizing all the funds available to you drains your retirement and leaves you with very little cushion for unforeseen events (as already noted), it may be best to use a smaller amount for closing and just deal with the PMI for a couple years. PMI is likely less than the taxes/penalties incurred from withdrawing a full 20% + closing costs. Let alone the lost earning on the accounts (above your mortgage interest rate); but personally I think the stability of significant home equity is worth more than anticipated stock gains. I would recommend pulling enough to buy the house comfortably without dipping too deeply in any one area, while still paying down your balance to where you can eliminate PMI quickly (say 2-3 years). Your limits for each account are approximately: Roth IRAs:  Traditional IRAs: Brokerage (non-retirement): Checking: Things to consider:   If you are current on your payments, you can request PMI removal once your loan-to-value drops below 80% - it also terminates automatically when it is scheduled to drop below 78% (not if it actually has). Many loans have a 2 year minimum PMI period though, regardless of your Loan To Value (LTV) changes. LTV changes could be from: The best way to get cash from retirement is to not do it.  Leave the retirement savings alone.  Start saving for house down payment.  Look for ways to squirrel away money for that down payment.  Consider payment plus insurance, taxes, and maintenance costs.  If all that comes in less than a rental, you're probably better off buying.  Most likely it will not.  Make sure that when you go to buy, you have 20% down, AND an emergency fund that will cover you for 3 months of expenses at the new, higher, rate.  Hint, that'll probably be in excess of 10k based on a single person with a 1.5-2k a month mortgage, plus utilities and food.  And as a home owner, you will have a lot of things for which that emergency fund will come in handy.  It's a matter of when, not if.  Consider, 5k for a new roof, 6k for a hvac system, 1.5k for exterior paint, 500 for the plumber, 750 for pest control, 250 to have the tree removed that fell in a storm.  1000 for a new fridge.  500 for a new water heater.  1200 for washer and dryer.  ALL of these are periodic costs, and they all able to fail before they're supposed to.
"In your situation, you probably should not cash in your IRA and 401(k). A good mortgage lender will want to see that you have ""reserves"" -- money that you could fall back on if you hit a very rough patch.  Your current savings and retirement accounts might add up to a suitable reserve. You might want to do something like this instead: By the way, instead of cashing in a 401(k), it is usually better to: This method avoids large tax penalties, and encourages you to rebuild your 401(k).  Unfortunately, your large debt balances might prevent you from getting the PLOC.  But even in the worst case scenario (where you cannot use a PLOC to pay off a 401(k) balloon payment), it postpones the tax hit until after the balloon payment." Long ago when I was applying for my first mortgage I had to list all my income and assets. At the time I had some US Savings Bonds from payroll deduction. I asked about them. The loan officer told me that unless I was willing/planning on selling them to make the down payment, they were immaterial to the loan application. So unless you have a habit of turning RSUs into cash, or are willing to do so for the down payment, it is no different from having money in a 401K or IRA: the restrictions on selling them make them illiquid. "This is the meat of your potato question. The rephrasing of the question to a lending/real estate executive such as myself, I'd ask, what's the scenario? ""I would say you're looking for an Owner Occupied, Super Jumbo Loan with 20% Down or $360K down on the purchase price, $1.8 mil purchase price, Loan Amount is ~$1.45 mil. Fico is strong (assumption). If this is your scenario, please see image. Yellow is important, more debt increases your backend-DTI which is not good for the deal. As long as it's less than 35%, you're okay.  Can someone do this loan, the short answer is yes. It's smart that you want to keep more cash on hand. Which is understandable, if the price of the property declines, you've lost your shirt and your down payment, then it will take close to 10 years to recover your down. Consider that you are buying at a peak in real estate prices. Prices can't go up more than they are now. Consider that properties peaked in 2006, cooled in 2007, and crashed in 2008. Properties declined for more than 25-45% in 2008; regardless of your reasons of not wanting to come to the full 40% down, it's a bit smarter to hold on to cash for other investments purposes. Just incase a recession does hit.  In the end, if you do the deal-You'll pay more in points, a higher rate compared to the 40% down scenario, the origination fee would increase slightly but you'll keep your money on hand to invest elsewhere, perhaps some units that can help with the cashflow of your home. I've highlighted in yellow what the most important factors that will be affected on a lower down payment. If your debt is low or zero, and income is as high as the scenario, with a fico score of at least 680, you can do the deal all day long. These deals are not uncommon in today's market. Rate will vary. Don't pay attention to the rate, the rate will fluctuate based on many variables, but it's a high figure to give you an idea on total cost and monthly payment for qualification purposes, also to look at the DTI requirement for cash/debt.  See Image below:" "I'd not heard of being able to withdraw penalty free before.  So I looked it up.  It might be penalty free, but it's not tax free.  So if your marginal tax rate is 25%, and you withdraw 10,000 from a regular IRA, 1/4 of the money will have to come from taxes. Personally, unless you're in a huge hurry to buy the best screaming deal ever seen in your jurisdiction, I'd not touch the 401k...  but I would slow down 401k investing to be the minimum required to maximize the match, and throw the rest to saving for the house. Also, your pronouns are ""I,"" not ""We.""  If you'd like to be married, I would put off buying a home further, in case your future spouse doesn't like the home you pick." It looks like with the sale of your current home you have enough liquidity to obtain credit on the best terms without tapping your wife's IRA. The biggest factor to consider is the deduction on mortgage interest which reduces the effective interest on your mortgage significantly, particularly as you jump into a higher tax bracket. Along these lines, deferred retirement savings should have a higher priority than paying down the mortgage or your student loans. Student loans should probably be your biggest priority to pay down. With the mortgage deduction, a 4% rate becomes effectively a 3.4% rate if you are in the 15% bracket, but as low as 2.6% effective rate if you are in the 35% bracket. Both of these are lower than the 3.5% rate that you can get on the student loans after refinancing.  This also assumes you aren't hit with the AMT. This is probably worth the cost of a quick consultation with a tax professional to go over these options and how they affect your taxes. There is a 3rd option: take the cash back offer, but get the money from a auto loan from your bank or credit  union. The loan will only be for. $22,500 which can still be a better deal than option B. Of course the monthly payment can make it harder to qualify for the mortgage. Using the MS Excel goal seek tool and the pmt() function:  will make the total payment equal to 24K. Both numbers are well above the rates charged by my credit union so option C would be cheaper than option B. why not ask a fee only financial adviser? Contact a local adviser and ask how much they will charge to work through the process.  The options aren't as complex as they seem. The general idea is to first figure out what you can afford each month. This is a generally straight forward calculation.  Then figure out the costs that are specific to your area, e.g property taxes.  Figure out how much of a down payment /closing costs you can gather.  Then start with your local bank or credit union. The number of options for mortgages will not be as complex if you already know how much you can afford and how much cash you can bring to the transaction. A simple table can be easily created based on what you can afford each month, how much cash you have, and the rates currently available. The bank will have a way to estimate the costs of each option as part of the required disclosures. Another source of good info can be a highly regarded local real estate agent. Focus on one that will represent you as a purchaser. They want you to be able to buy a house. While they do have a bias, they want a commission, most of it is eliminated if you know how much you can afford before you meet with them. They will know all the government programs that can make the monthly costs or closing costs cheaper. In the 2008 housing crash, cash was king.  Cash can make your mortgage payment, buy groceries, utilities, etc. Great deals on bank owned properties were available for those with cash.  Getting a mortgage in 2008-2011 was tough. If you are worried about stock market crashing, then diversification is key.  Don't have all your investments in one mutual fund or sector.   Gold and precious metals have a place in one's portfolio, say 5-10 percent as an insurance policy.  The days of using a Gold Double Eagle to pay the property taxes are largely gone, although Utah does allow it. The biggest lesson I took from the crash is you cant have too much cash saved.  Build up the rainy day fund. I'll summarize here our discussion in the comments. First thing to remember is that you can only deposit up to $6K/year into the Roth IRA, you cannot seed it with some large amount (unless its a rollover). Second thing to remember is that you can only qualify 10K distribution for the home purchase. With that in mind, it seems that you'll have to have extremly high returns to make use of the maximum tax benefit (15-20% of the 10K). Non-qualified distributions will be taxed at ordinary income rates + 10% penalty, so if you can't qualify the distribution, instead of saving money on taxes, you'll end up paying twice as much as you would have without the IRA. Also, keep in mind that reporting of the distributions and justifying the qualifications might require assistance of a tax preparer, which will also reduce your savings. Bottom line, IMHO, you'll end up with a wash or very insignificant savings (compared to the magnitude of the home purchase costs) at best, which renders the whole thing kindof wastefull. I'd keep the risk inside the well-funded retirement accounts. Outside those accounts, I'd save to have a proper emergency fund, not based on today's expenses, but on expenses post house. The rest, I'd save toward the downpayment. 20% down, with a reserve for the spending that comes with a home purchase.  It's my opinion that 3-5 years isn't enough to put this money at risk. With a Roth IRA, you can withdraw the contributions at any time without penalty as long as you don't withdraw the earnings/interest. There are some circumstances where you can withdraw the earnings such as disability (and maybe first home). Also, the Roth IRA doesn't need to go through your employer and I wouldn't do it through your employer. I have mine setup through Fidelity though I'm not sure if they have any guaranteed 3% return unless it was a CD. All of mine is in stocks. Your wife could also setup a Roth IRA so over 2 years, you could contribute $20,000. If I was you, I would just max out any 403-b matches (which you surely are at 25% of gross income) and then save my down payment money in a normal money market/savings account. You are doing good contributing almost 25% to the 403-b. There are also some income limitations on Roth IRAs. I believe for a married couple, it is $160k. Drawing down from a nest egg is predominately dealing with 3 issues: The much used withdrawal amount used to not deplete your principal is 4%. Some may argue this is too much or not enough but it is regarded as a standard amount.  Seeing that you have $500k you can pull about $20k per year using this drawdown percentage.  If you can live on $20k then you are set.  If not you should build up this nest egg. I don't quite understand your thought process here.  First, in a tax-advantaged retirement account you are NOT allowed to engage in a transaction with yourself.   If you just want to run a business and be able to write off expenses, how is using the self-directed IRA relevant? You can either buy the condo using your tax-advantaged account and rent it out to regular tenants.  Or you buy the condo yourself using your own money and then operate your business so you can deduct business expenses from doing so.  401k's allow you to take a loan out of it, so you can look into that as well. Have you changed how you handle fund distributions?  While it is typical to re-invest the distributions to buy additional shares, this may not make sense if you want to get a little cash to use for the home purchase.  While you may already handle this, it isn't mentioned in the question. While it likely won't make a big difference, it could be a useful factor to consider, potentially if you ponder how risky is it having your down payment fluctuate in value from day to day.  I'd just think it is more convenient to take the distributions in cash and that way have fewer transactions to report in the following year.  Unless you have a working crystal ball, there is no way to definitively predict if the market will be up or down in exactly 2 years from now.  Thus, I suggest taking the distributions in cash and investing in something much lower risk like a money market mutual fund. Use some form of escrow agent: Some freelancer sites provide payment escrow services (e.g. E-Lance). In this system the client puts money in escrow for the project in advance and then when they accept the project it forwards the payment to the provider. Progress Payments Arrange a progress payment approach with the client where they pay at certain milestones rather than a single payment at the end of the project. Ideally you would have them pre-pay for each milestone before you start work on it. However, you could ask for payment after each milestone, which might be easier to sell to your client. It does leave some risk, but minimizes that risk somewhat.