You can withdraw contributions from your Roth IRA to buy a house at any time without penalty, but earnings have strict limits

The short answer: you can take out the money you personally contributed to your Roth IRA whenever you want, for any reason, without tax or penalty. The earnings your money made inside the account are different — those follow rules that depend on your age and how long you have held the account.

The IRS treats Roth IRAs differently from other retirement accounts because you already paid income tax on the money going in. That changes what you can pull out and when. For a home purchase, the rules give you one specific path that lets you access earnings before age 59½, but it has a dollar limit and timing requirements.

Key Takeaways

  • You can withdraw your own contributions to a Roth IRA at any time for any reason, including a home purchase, without tax or penalty.
  • Earnings in your Roth IRA can only be withdrawn penalty-free before age 59½ if you use the first-time homebuyer exception, which allows up to $10,000 lifetime.
  • The first-time homebuyer exception requires you to have owned the account for at least five tax years, even if you are under 59½.
  • If you withdraw earnings without meeting the first-time homebuyer rules, you owe income tax on that amount plus a 10 percent early withdrawal penalty.
  • Contributions you have already withdrawn from your Roth IRA cannot be put back in the same year; you would need to use a different contribution year's limit.

The difference between contributions and earnings in your Roth IRA

Your Roth IRA holds two separate piles of money: what you put in (contributions) and what that money earned (earnings). The IRS tracks these separately, and the rules for taking them out are completely different.

Contributions are the dollars you deposited yourself. If you contributed $7,000 in 2023 and $7,000 in 2024, you have $14,000 in contributions. You can withdraw this amount at any time, at any age, for any reason — no tax, no penalty. The IRS does not care what you do with it.

Earnings are the investment gains, dividends, and interest your account generated. If your $14,000 in contributions grew to $16,500, the $2,500 is earnings. These are subject to tax and penalties if you do not meet specific conditions, even though you own the account.

The first-time homebuyer exception for Roth IRA earnings

The IRS allows you to withdraw up to $10,000 in earnings from your Roth IRA without the 10 percent early withdrawal penalty if you are a first-time homebuyer. This is a one-time lifetime limit, not $10,000 per year.

To use this exception, you must meet two conditions. First, you must have owned the Roth IRA for at least five tax years. This five-year period starts on January 1 of the year you opened the account or made your first contribution, whichever is earlier. Second, you must use the money within 120 days of withdrawal to buy, build, or rebuild a home that will be your primary residence.

The IRS defines a first-time homebuyer as someone who has not owned a home in the two years before the withdrawal. If you owned a home three years ago, you still count as a first-time buyer. If you owned one two years ago, you do not.

Even if you meet the first-time homebuyer exception, you still owe income tax on the earnings you withdraw. The exception removes only the 10 percent penalty. If you withdraw $5,000 in earnings and you are in the 22 percent tax bracket, you owe $1,100 in federal income tax on that withdrawal.

What happens if you do not meet the first-time homebuyer rules

If you withdraw earnings before age 59½ and you do not may have access to for the first-time homebuyer exception, you owe both income tax and a 10 percent early withdrawal penalty on the earnings portion.

For example, suppose you have $20,000 in contributions and $5,000 in earnings, and you withdraw $15,000 for a home purchase. The IRS considers the first $15,000 you withdraw to come from your contributions (the money you put in first). You take out $15,000 in contributions with no tax or penalty. Your $5,000 in earnings stays in the account.

But if you withdraw $25,000 from that same account, the first $20,000 comes from contributions (tax-free), and the remaining $5,000 comes from earnings. If you are under 59½ and do not meet the first-time homebuyer exception, you owe income tax plus a 10 percent penalty on that $5,000 in earnings.

The five-year rule for Roth IRA accounts

Even if you meet the first-time homebuyer definition, you cannot use the earnings exception unless your Roth IRA has been open for at least five tax years. This five-year clock starts on January 1 of the tax year you opened the account or made your first contribution.

If you opened your Roth IRA on June 15, 2020, the five-year period began on January 1, 2020. You can use the first-time homebuyer exception on January 1, 2025, even though you have only owned the account for about 4.5 calendar years. If you opened it on June 15, 2021, the five-year period began on January 1, 2021, and you can use the exception starting January 1, 2026.

This rule applies separately to each Roth IRA you own. If you have two Roth IRAs and opened one in 2020 and another in 2023, the 2020 account meets the five-year test but the 2023 account does not — yet.

How to withdraw money from your Roth IRA for a home purchase

Contact your Roth IRA provider (your bank, brokerage, or investment firm) and request a withdrawal. Tell them the amount and ask whether they need any documentation. Most providers do not require you to prove the money is for a home purchase, but some may ask you to sign a form stating that you meet the first-time homebuyer definition.

The provider will send you the money, usually within three to five business days for cash accounts or longer if your money is invested in stocks or mutual funds that need to be sold first. They will also send you a Form 1099-R at the end of the year reporting the withdrawal to the IRS.

If you withdrew only contributions, you have nothing else to do. If you withdrew earnings and you are claiming the first-time homebuyer exception, keep records showing you used the money for a home purchase within 120 days. If the IRS ever questions the withdrawal, you will need to show proof — a closing statement, a building contract, or a receipt for construction materials.

Other ways to access retirement savings for a home purchase

A Roth IRA is not the only retirement account with a home-purchase exception. A traditional IRA also allows first-time homebuyers to withdraw up to $10,000 in earnings without the 10 percent penalty, though you still owe income tax. A 401(k) may allow you to borrow against your balance (not a withdrawal) if your plan permits it, which means you repay the money with interest and avoid taxes and penalties.

Some people also consider a Roth conversion, where they move money from a traditional IRA to a Roth IRA. Contributions to a Roth IRA can be withdrawn when ready, but converted amounts have their own five-year rule. This strategy is complex and usually requires information from a tax professional.

Frequently Asked Questions

Can I put the money back into my Roth IRA after I use it for a house?

No, not in the same contribution year. If you withdrew $10,000 in 2024, you cannot re-contribute that $10,000 in 2024. You can contribute up to your annual limit in future years, but the withdrawn amount does not come back automatically. If you want to rebuild your Roth IRA balance, you must contribute new money using future years' contribution limits.

What if I withdraw the money but do not buy a house within 120 days?

If you claimed the first-time homebuyer exception but did not use the money for a home purchase within 120 days, you owe income tax and the 10 percent penalty on the earnings portion. You cannot undo the withdrawal. The IRS does not require you to report this yourself; if you do not meet the conditions, you straightforward owe the tax and penalty when you file your return.

Does my spouse's Roth IRA count as a separate account for the $10,000 limit?

Yes. Each person has their own $10,000 lifetime first-time homebuyer limit. If you are married and both have Roth IRAs, you can each withdraw up to $10,000 in earnings under the exception, for a household total of $20,000. Each account must meet the five-year rule separately.

Can I withdraw from a Roth IRA I inherited from someone else?

The rules are different for inherited Roth IRAs. You cannot use the first-time homebuyer exception on an inherited account. You can withdraw contributions from an inherited Roth IRA, but earnings are subject to tax and penalties unless you meet other exceptions. Inherited accounts have their own five-year rules that depend on when the original owner opened the account.

If I take out contributions for a house, does that reduce my retirement savings?

Yes. Money you withdraw from your Roth IRA is gone and cannot grow for retirement. Even though you can withdraw contributions without penalty, doing so means less money compounding over time. Many people use this option only if they have other retirement savings or if the home purchase is essential.