Yes, you can withdraw funds from your IRA or Roth IRA to use as a down payment on a house, but the tax implications and penalties vary depending on the type of account and your specific circumstances.

Traditional IRA:

• First-Time Homebuyer Exception: The IRS allows first-time homebuyers to withdraw up to $10,000 from a traditional IRA without incurring the 10% early withdrawal penalty. However, the withdrawn amount is subject to ordinary income tax. 

• Definition of First-Time Homebuyer: For this purpose, a first-time homebuyer is someone who hasn’t owned a principal residence in the two years preceding the home purchase. This exception also applies if the funds are used to help a spouse, child, grandchild, or parent who meets the first-time homebuyer criteria. 

Roth IRA:

• Contributions: You can withdraw your direct contributions to a Roth IRA at any time, tax- and penalty-free, regardless of your age or how long the account has been open. 

• Earnings: To withdraw earnings tax- and penalty-free for a first-time home purchase, the following conditions must be met:

• The Roth IRA must have been open for at least five years.

• You must be a first-time homebuyer, as defined above.

• The withdrawal is limited to a $10,000 lifetime maximum. 

• If the Five-Year Rule Isn’t Met: If your Roth IRA hasn’t been open for five years, you can still withdraw up to $10,000 of earnings for a first-time home purchase without the 10% penalty, but you’ll owe ordinary income tax on the earnings. 

Additional Considerations:

• Lifetime Limit: The $10,000 limit is a lifetime cap for each individual. If both you and your spouse qualify as first-time homebuyers, each can withdraw up to $10,000 from your respective IRAs without penalties, potentially providing $20,000 for a down payment. 

• Qualified Acquisition Costs: The withdrawn funds must be used within 120 days for qualified acquisition costs, which include the purchase, building, or rebuilding of a home, as well as associated settlement, financing, or closing costs. 

Before proceeding, it’s advisable to consult with a tax professional to understand the full implications of withdrawing from your retirement accounts for a home purchase.