Does a 401K help a first time home buyer?

[MaDHaVoK]

I just qualified for works 401K plan. I would like to start saving to buy a house. Can I use the 401k without penalty for a house? Or should I just save money in a Roth IRA or something...

I'm new to this, thanks.

 

[richardycc]

a 401k or IRA acct with 0 balance will do you no good. you can borrow against the 401k, and take money out of a regular IRA without penalty (but you will still have to pay taxes on) for your first home I think up to 10k. Roth IRA, you can start taking your contributions out after 5 yrs.

 

[MaDHaVoK]

Let me clarify. I don't want to buy a house for 3 - 5 years. I want to start saving the best way possible now.

 

[Yax]

Not a good idea to use your 401K for home buying. Put some money in the 401K, but open up a separate mutual fund account and put some in that. Pull that money out later to buy a home.

 

[RU482]

If you pull money out of the 401K for your house, do you have to pay taxes on it?

If not, then I'd say pulling the money out of your 401K is better than from a separate mutual fund account you paid taxes on

 

[milehigh]

The 401k will allow you to put away more money, especially if there is an employer match. You may contribute to a Roth IRA even if you participate in an employee sponsored plan (your 401k). If you can swing it financially, max out both.

 

[SuperTool]

You can borrow up to half of your 401k for up to 10 years to buy a primary residence. You don't pay taxes on the money if you repay it in full. If you default, the part you default on will be subject to taxes and a penalty. So 401k does help you.

 

[jayXTP]

Is it a good idea to have both a 401k (through work) and a Roth IRA? If my 401k is with Fidelity, would it be a good idea to open a Roth IRA with them too, or somewhere else?